As filed with the Securities and Exchange Commission on September 9, 1997

Registration No. 333-32611

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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RENEX CORP.
(Exact name of registrant as specified in its charter)
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FLORIDA 8092 65-0422087
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)

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2100 PONCE DE LEON BOULEVARD, SUITE 950, CORAL GABLES, FLORIDA 33134 (305)
448-2044
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------------

JAMES P. SHEA
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RENEX CORP.
2100 PONCE DE LEON BOULEVARD, SUITE 950
CORAL GABLES, FLORIDA 33134 (305) 448-2044
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------

Copies to:

BRYAN W. BAUMAN, ESQ. RODD M. SCHREIBER, ESQ.
WALLACE, BAUMAN, FODIMAN & SHANNON, P.A. SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS)
2222 Ponce de Leon Boulevard, Sixth Floor 333 West Wacker Drive, Suite 2100
Coral Gables, Florida 33134 Chicago, Illinois 60606
(305) 444-9991 (312) 407-0700
ANDREW J. BECK, ESQ.
HAYTHE & CURLEY
237 Park Avenue
New York, New York 10017
(212) 880-6000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date hereof.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

=================================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ------------------------------------------------------------------------------------------------------------------------------

Common Stock, $.001 par value per share.......... 3,450,000 $9.00 $31,050,000 $9,409
- ------------------------------------------------------------------------------------------------------------------------------
Representatives' Warrants(3)..................... 300,000 $.0001 $30 $.01
- ------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value per share(4)....... 300,000 $9.63 $2,889,000 $876
- ------------------------------------------------------------------------------------------------------------------------------
Total registration fee....................................................................................... $10,285.01(5)
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(1) Includes 450,000 shares which the Underwriters have the option to purchase
from the Company to cover over-allotments, if any. See "Underwriting."
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933.

(3) Each Representatives' Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of 107% of the initial public offering
price per share.

(4) Such shares are issuable upon exercise of the Representatives' Warrants.

(5) The Registrant previously paid a registration fee of $9,409.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
================================================================================
2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED SEPTEMBER 9, 1997

PROSPECTUS

3,000,000 SHARES

RENEX LOGO

COMMON STOCK

All of the 3,000,000 shares of Common Stock offered hereby are being sold
by Renex Corp. ("Renex" or the "Company"). Prior to the Offering, there has been
no public market for the Common Stock of the Company. It is currently estimated
that the initial public offering price will be between $7.00 and $9.00 per
share. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price. The Company has applied to list
the Common Stock for quotation on the Nasdaq National Market under the symbol
"RENX."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 6.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

==============================================================================================================
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share.............................. $ $ $
- --------------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $
==============================================================================================================

(1) Excludes the issuance of warrants to the Representatives of the Underwriters
(the "Representatives") to purchase 300,000 shares of Common Stock,
exercisable for a period of five years commencing on the date of this
Prospectus, at an exercise price of 107% of the initial public offering
price set forth above. Holders of such warrants have been granted certain
registration rights under the Securities Act of 1933, as amended, with
respect to the securities issuable upon exercise of such warrants. The
Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses of the Offering payable by the Company, estimated
at $480,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
450,000 additional shares of Common Stock on the same terms and conditions
set forth above, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ ,
and $ , respectively. See "Underwriting."

---------------------

The shares of Common Stock offered by the Underwriters are subject to prior
sale, receipt and acceptance by them and subject to the right of the
Underwriters to reject any order in whole or in part and certain other
conditions. It is expected that delivery of such shares will be made at the
offices of the agent of Vector Securities International, Inc., in New York, New
York, on or about , 1997.

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Vector Securities International, Inc. Needham & Company, Inc.

, 1997
3

(Map depicting location of Company's facilities and other
services, together with pictures of inside and outside of a
representative facility.)

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE
IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT
THE PRICE OF THE COMMON STOCK OF THE COMPANY, INCLUDING BY
ENTERING STABILIZING BIDS OR EFFECTING SYNDICATE COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."

"Renex(R)" is a tradename of Renex Corp.

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Top Photo: Renex outpatient dialysis facility located in Tampa, Florida.

Middle Photo: Dialysis station area at one of Renex' twelve outpatient dialysis
facilities.

Bottom Photo: Renex patient care professionals administering life sustaining
hemodialysis to an end stage renal disease patient.
5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus,
including information under "Risk Factors." Throughout this Prospectus, except
where the context otherwise requires, reference to the "Company" or "Renex"
means the Company and its subsidiaries. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed in "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

THE COMPANY

Renex Corp., operating through its wholly-owned subsidiaries, is a high
quality provider of dialysis and ancillary services to patients suffering from
chronic kidney failure, generally referred to as end stage renal disease
("ESRD"). The Company has grown primarily through the development of new
facilities ("de novo" development) and more recently through acquisitions, and
seeks to distinguish itself on the basis of quality patient care and
responsiveness to the professional needs of its referring nephrologists. The
Company currently provides dialysis services to approximately 800 patients in
seven states, through twelve outpatient dialysis facilities and two staff
assisted home dialysis programs. Additionally, the Company provides inpatient
dialysis services at five hospitals. The Company intends to accelerate the
penetration of its existing markets through a combination of acquisitions and de
novo development and to enter new markets, primarily through acquisitions, in
which the Company believes it can establish significant market share over time.

ESRD is the state of advanced chronic kidney disease characterized by the
irreversible loss of kidney function. A normal human kidney removes waste
products and excess water from the blood, preventing water overload, toxin
buildup and eventual poisoning of the body. Chronic kidney disease can be caused
by a number of conditions, including inherited diseases, diabetes, hypertension
and other illnesses. Patients suffering from ESRD require routine dialysis
treatments or kidney transplantation to sustain life. According to the Health
Care Financing Administration ("HCFA"), the number of patients requiring chronic
kidney dialysis services in the United States has increased from 66,000 patients
in 1982 to over 200,000 patients in 1995. According to the National Institutes
of Health, the number of ESRD patients is projected to reach 300,000 by the year
2000. According to HCFA, total spending for ESRD in the United States in 1995
was an estimated $13.1 billion. Of this amount, the Company estimates $6.0
billion was spent for dialysis treatment and ancillary services.

Patients with ESRD generally receive dialysis treatments through a dialysis
facility, which may be a free-standing or a hospital-based outpatient facility.
The primary function of dialysis facilities is to provide ESRD patients with
life sustaining kidney dialysis, including both hemodialysis and peritoneal
dialysis. HCFA estimates that as of December 31, 1995, approximately 84% of ESRD
patients in the United States were receiving hemodialysis treatments (83% in
outpatient facilities and 1% in the home) and that approximately 16% of all ESRD
patients were receiving peritoneal dialysis in the home, under the supervision
of an outpatient facility. ESRD patients are generally under the care of a
nephrologist, who serves as the primary gatekeeper of ESRD patients and, in
consultation with the patient, plays a significant role in determining which
dialysis facility and hospital will be used for such patient. The nephrologist
is typically supported by a team of dialysis professionals, including patient
care personnel, dieticians and social workers. Most dialysis facilities offer a
range of services to ESRD patients, including: dialysis treatments; provision of
supplies and equipment; patient, family and community training and education;
insurance counseling; billing services; dietary counseling; and social services
support.

As of August 31, 1997, the Company operated twelve outpatient dialysis
facilities, with a total of 187 certified dialysis stations. The Company has
four additional facilities under development located in North Andover,
Massachusetts; Union, Missouri; Maplewood, Missouri; and Bloomfield, New Jersey.
The North Andover facility is near completion and is scheduled to open in
October 1997. The Union facility's building is under construction, and the
Maplewood and Bloomfield facilities are in the pre-construction phase. The
Maplewood facility is expected to open in December 1997, and the Union

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and Bloomfield facilities are expected to open in the first quarter of 1998. The
Company's dialysis facilities are designed specifically for outpatient
hemodialysis and for the training of peritoneal dialysis and home hemodialysis
patients. Each facility has between eight and 21 dialysis stations and many
facilities are designed to accommodate additional stations as patient census
increases. All of the Company's facilities contain state-of-the-art equipment
and modern accommodations and are typically located near public transportation.
The facilities are designed to provide a pleasant and comfortable environment
for each patient and include such amenities as color television sets for each
patient station, VCRs for patient education and entertainment, and portable
telephones. In addition to the Company's outpatient dialysis facilities, the
Company provides staff-assisted home hemodialysis services in St. Louis,
Missouri and Tampa, Florida, and provides inpatient dialysis services to five
hospitals pursuant to contracts negotiated with the hospitals for per-treatment
rates paid directly by the hospitals. The Company also provides a full range of
ancillary services to ESRD patients.

The Company's goal is to continue expanding its geographic coverage and
market penetration while maintaining high quality patient care and physician
satisfaction with its services. The Company's growth strategy is focused on
establishing local clusters of dialysis facilities in order to create strong
regional networks. Renex has targeted seven markets, in which it has operations,
for the development of regional networks. The Company intends to continue to
grow these regional networks through a combination of strategic acquisitions and
de novo development. Additionally, Renex seeks to enter new markets in which it
believes that it can establish significant market share over time. The Company
also intends to continue to establish alliances with hospitals and managed care
organizations, and to capitalize on its relationships with nephrologists by
emphasizing high quality patient care and sensitivity to physicians'
professional concerns.

Renex Corp. was incorporated in Florida on July 7, 1993. The Company's
executive offices are located at 2100 Ponce de Leon Boulevard, Suite 950, Coral
Gables, Florida 33134, and its telephone number is (305) 448-2044.

THE OFFERING

Common Stock offered......................... 3,000,000 shares

Common Stock to be outstanding after the
Offering..................................... 6,974,247 shares(1)

Use of proceeds.............................. For repayment of indebtedness,
including redemption of a warrant issued in connection with a portion of such
indebtedness; capital
expenditures associated with
facilities under development;
acquisitions; de novo facility
development; and working
capital and other general
corporate purposes. See "Use of
Proceeds."

Proposed Nasdaq National Market symbol....... RENX
- ---------------

(1) Excludes: (i) 355,064 shares issuable upon exercise of options granted
pursuant to the Company's stock option plans, at a weighted average exercise
price of $6.96 per share; (ii) an aggregate of 478,270 shares reserved for
issuance for future grants of options under the Company's stock option
plans; (iii) 49,169 shares issuable upon exercise of options granted to two
of the Company's directors and three other individuals, at a weighted
average exercise price of $6.51 per share; (iv) 441,621 shares reserved for
issuance upon exercise of outstanding warrants at a weighted average
exercise price of $6.88 per share; and (v) 300,000 shares issuable upon
exercise of warrants issued to the Representatives at an exercise price of
107% of the initial public offering price per share (the "Representatives'
Warrants"). See "Management," "Certain Transactions," "Description of
Securities" and "Underwriting."

---------------------

Except as otherwise noted, all information in this Prospectus, including
financial information, share and per share data assumes: (i) an initial public
offering price of $8.00 per share; (ii) no exercise of the Underwriters'
over-allotment option; and (iii) a 1-for-3 reverse stock split of the Common
Stock effected as of April 21, 1997. See "Description of Securities" and
"Underwriting."

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7

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT SHARE AND OPERATING DATA)

PERIOD FROM
INCEPTION
(JULY 7, 1993) SIX MONTHS ENDED
TO YEARS ENDED DECEMBER 31, JUNE 30,
DECEMBER 31, ------------------------------------ -----------------------
1993 1994 1995 1996 1996 1997
----------------- ---------- ---------- ---------- ---------- ----------

STATEMENTS OF OPERATIONS DATA:
Net revenues...................... $ -- $2,746 $ 8,794 $18,569 $8,320 $12,432
Operating expenses................ 357 3,649 9,495 20,241 8,655 12,263
Operating income (loss)........... (357) (903) (701) (1,672) (335) 169
Net interest income (expense)..... 35 61 (360) (915) (419) (537)
Net (loss)........................ (322) (842) (1,187) (2,449) (862) (503)
Net (loss) per share(1)........... $(.13) $ (.31) $ (.40) $ (.66) $ (.25) $ (.12)
Weighted average number of shares
outstanding..................... 2,395,835 2,759,884 2,963,193 3,693,617 3,503,664 4,067,747

PRO FORMA DATA:
Pro forma net (loss)(2)........... $(3,693) $(1,738)
Pro forma net (loss) per common
share(2)........................ $ (.76) $ (.33)
Shares used in computation of pro
forma net (loss) per common
share(3)........................ 4,861,062 5,235,192

OPERATING DATA:
Patients (at period end)(4)....... 142 319 691 530 791
Treatments(5)..................... 10,260 33,702 77,919 34,877 52,964
Number of facilities (at period
end)(6)......................... 4 7 12 10 12

JUNE 30, 1997
------------------------
PRO FORMA
ACTUAL AS ADJUSTED(7)
------- --------------

BALANCE SHEET DATA:
Working capital........................................... $ 3,271 $14,930
Total assets.............................................. 17,095 28,893
Total debt................................................ 9,399 1,007
Total shareholders' equity................................ 3,826 24,016

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(1) See Note 1 of Notes to Consolidated Financial Statements for information
concerning the computation of net (loss) per share.

(2) Pro forma statements of operations information is presented to give effect
to the sale of the 3,000,000 shares offered hereby and the receipt and
application of approximately $9.0 million of the net proceeds therefrom for
repayment of certain indebtedness, including $422,000 for redemption of a
warrant issued in connection with a portion of such indebtedness. The
redemption of this warrant, together with the non-cash write-off of deferred
financing costs related to repayment of certain of the indebtedness will
result in a one-time charge of approximately $1.5 million. See "Use of
Proceeds."

(3) Includes the weighted average number of shares of Common Stock outstanding
at such date and 1,167,445 of the 3,000,000 shares offered hereby, the
proceeds of which will be used for repayment of indebtedness.

(4) Number of ESRD patients under care, including patients receiving dialysis
treatments in the Company's outpatient facilities and in the patients'
homes. Data for the year ended December 31, 1995 excludes patients of three
facilities acquired on December 29, 1995. See "Business -- Operations."

(5) Treatments include all dialysis treatments provided in outpatient
facilities, patients' homes and hospitals. Peritoneal dialysis treatments
are stated in hemodialysis equivalents. See "Business -- Operations."

(6) Data for the year ended December 31, 1995 excludes three facilities acquired
on December 29, 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview" and
"Business -- Operations."

(7) Pro forma as adjusted to give effect to the receipt and application of the
estimated net proceeds from the sale of the 3,000,000 shares offered hereby.
See "Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

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RISK FACTORS

PROSPECTIVE INVESTORS IN THE SHARES OF COMMON STOCK OFFERED HEREBY SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THESE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" AND "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

HISTORY OF LOSSES; NO ASSURANCE OF PROFITABILITY. The Company has no
history of earnings upon which to base an evaluation of its future operating
efficiency or financial condition. The Company has experienced significant
losses since its inception in July 1993 and had an accumulated deficit of $5.3
million through June 30, 1997. Net losses for the years ended December 31, 1994,
1995 and 1996 were $842,000, $1.2 million and $2.4 million, respectively. Net
losses for the six months ended June 30, 1996 and 1997 were $862,000 and
$503,000, respectively. The Company expects its operating losses to continue at
least through 1997 as it continues to expend substantial resources to develop
its existing facilities, as well as to acquire and build new facilities. The
Company's ability to achieve profitability is largely dependent upon increased
utilization of its existing facilities, the acquisition and development of
additional dialysis facilities and the continued availability of adequate
third-party reimbursement for its services. There can be no assurance that the
Company will achieve or sustain profitability or positive cash flow from
operating activities, in which case it may not be able to meet its debt service
or working capital requirements. The Company's future performance will depend,
among other things, upon the Company's ability to develop and manage dialysis
facilities not yet in existence, and to acquire facilities and successfully
integrate such facilities into the Company's operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Business Strategy," "Business -- Sources of Reimbursement" and
"Business -- Government Regulation."

NEED FOR SUBSTANTIAL WORKING CAPITAL. The Company requires substantial
working capital to fund its accounts receivable. Like other health care
providers, the Company relies on third-party payors, primarily Medicare, for
payment of a substantial portion of its billings. The Company must finance its
receivable balances between the time services are provided and collection. The
Company's net accounts receivable balance as of June 30, 1997 was $5.9 million.
Since inception, the Company has not generated positive cash flow due to, among
other things, continued losses, increases in its receivable balances and capital
expenditures for expansion. The Company does not expect that internally
generated funds will satisfy its working capital requirements and will continue
to rely on external sources of debt or equity financings to meet its cash needs.
There can be no assurance that external sources of financing will be available,
or if available, on terms acceptable to the Company. If the Company is unable to
obtain external sources of financing, it would have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

DEPENDENCE UPON PROCEEDS OF OFFERING; POSSIBLE NEED FOR ADDITIONAL
CAPITAL. In order to implement its growth strategy, the Company intends to
expend substantial funds for acquisitions and de novo development of dialysis
facilities following completion of this Offering. The Company believes that the
net proceeds of this Offering, together with existing debt financing
arrangements and internally generated funds, will be sufficient to fund the
Company's operations and to finance the Company's proposed growth strategy
through the next 18 months. However, there can be no assurance that the Company
will not require substantial additional funds prior to such time. The Company's
future liquidity and capital requirements will be dependent on numerous factors,
including results of the Company's operations, the cost and timing of potential
acquisitions and de novo developments, the ability of the Company to integrate
such new facilities, developments related to government and other third-party
reimbursement matters, and other factors. If additional financing is needed, the
Company may seek additional funds from public and private equity or debt
financings or other arrangements.

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The Company currently has no commitments with respect to any other sources of
financing and there can be no assurance such financing sources would be
available, if needed, on terms acceptable to the Company, or at all. The failure
of the Company to obtain adequate financing could have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Use of Proceeds" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

LACK OF FULL FACILITY UTILIZATION. The profitability of the Company is
partially dependent on the utilization of its facilities. The average
utilization of the Company's facilities, taken as a whole, was approximately
41%, 46%, 61% and 72% as of December 31, 1994, 1995, 1996 and June 30, 1997,
respectively. Each facility has significant fixed costs which could cause such
facility to incur losses if utilization does not reach a sufficient level. As a
result, if utilization does not reach appropriate levels, net revenues would not
be sufficient to meet such facilities' operating expenses. Such underutilization
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company may find it
necessary to sell or close underutilized facilities, which could result in a
loss of some or all of the Company's investment in such facilities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE UPON GOVERNMENT REIMBURSEMENT. The Company estimates that
approximately 65%, 59% and 67% of its net revenues for the years ended December
31, 1994, 1995 and 1996, respectively, and approximately 67% and 76% of its net
revenues for the six months ended June 30, 1996 and 1997, respectively, were
derived from reimbursement under the federal Medicare and state Medicaid
programs, which cover virtually all patients with ESRD, regardless of age. The
maximum allowable charge (the"Composite Rate") for dialysis treatment of
Medicare patients is fixed by law. Once a patient becomes eligible for Medicare
reimbursement, Medicare reimburses the Company at 80% of the Composite Rate. The
Company is responsible for collecting the balance of the Composite Rate from the
patient, Medicaid or non-governmental payors, if any. The initial Composite Rate
for outpatient dialysis treatments was established in 1972 and remained
unchanged until 1983, when the Composite Rate was reduced from $138 per
treatment to $127 per treatment, on average. The Composite Rate was reduced
again in 1986 to $125 per treatment on average. The Composite Rate was increased
to $126 per treatment on average effective January 1, 1991. There can be no
assurance that this increase will remain in effect or that rates will not
decrease in the future. Recent cost containment initiatives by Medicare have
been aimed at reducing the cost of delivering services at non-hospital sites.
The Company is unable to predict what changes, if any, may occur in the
Composite Rate. Because of the Company's dependence on Medicare revenue, any
future rate reduction could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore, increases
in operating costs that are subject to inflation, such as labor and supply
costs, without a compensatory increase in prescribed rates, may adversely affect
the Company's results of operations in the future.

The Company is also unable to predict whether certain services, for which
the Company is separately reimbursed, may in the future be included in the
Composite Rate. Since June 1, 1989, the Medicare program has provided separate
reimbursement for the physician prescribed administration to dialysis patients
of bioengineered erythropoietin ("EPO"). Net revenues from the administration of
EPO (the substantial majority of which is reimbursed through Medicare and
Medicaid programs) were approximately $626,000, $1.9 million and $3.7 million,
or 22.8%, 21.7% and 19.9% of the Company's net revenues, for each of the years
ended December 31, 1994, 1995 and 1996, respectively. For the six months ended
June 30, 1996 and 1997, net revenues from the administration of EPO were
approximately $1.6 million and $2.6 million, or 19.0% and 20.9% of net revenues,
respectively. EPO reimbursements significantly affect the Company's earnings.
Effective January 1, 1994, the Medicare reimbursement rate was reduced from $11
to $10 per 1,000 units of EPO. In addition, Medicare will only reimburse for the
administration of EPO to patients whose hematocrit is below specified levels.
Any decrease in the hematocrit levels for which EPO administration is reimbursed
could have a material adverse effect on the Company's net revenues and earnings.
In its Fiscal Year 1997 Work Plan, the Office of Inspector General ("OIG") of
the Department of Health and Human Services ("HHS") stated that it may recommend
cuts in reimbursement rates for EPO because preliminary results of its

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study of EPO indicated that dialysis facilities' purchase price of EPO is less
than the current reimbursement rate. The Company is unable to predict future
changes in the reimbursement rate for the administration of EPO, the future
reimbursement dosage limit per administration, or the cost of the drug. Any
material reduction in such rates or limits, or an increase in costs could have a
material adverse effect on the Company's business, financial condition and
results of operations.

All of the Company's facilities are located in states which provide
Medicaid or comparable benefits for dialysis patients. Such benefits supplement
Medicare benefits or in some cases are the primary source of reimbursement.
Approximately 3% to 6% of the Company's net revenues for the years ended
December 31, 1994, 1995 and 1996 and for the six months ended June 30, 1996 and
1997 were derived from Medicaid or comparable state programs. Each state
Medicaid program is subject to statutory or regulatory changes, administrative
rulings, interpretations of policy and governmental findings at the state level.
All of these factors could have the effect of decreasing Medicaid payments,
increasing costs or requiring the Company to modify its operations, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Sources of Reimbursement."

DEPENDENCE UPON OTHER SOURCES OF REIMBURSEMENT. Approximately 35%, 41% and
33% of the Company's net revenues for the years ended December 31, 1994, 1995
and 1996, respectively and 33% and 24% for the six months ended June 30, 1996
and 1997, respectively, were from sources other than Medicare and Medicaid.
These sources include payments from third-party non-governmental payors and
hospitals at rates that generally exceed Medicare and Medicaid rates. The
recently enacted Balanced Budget Act of 1997 expands the period in which
employer-based group health plans are primary payors for the ESRD population
from 18 months to 30 months. The Company believes that if Medicare reimbursement
for dialysis treatment is reduced in the future, these private payors may be
required to assume a greater percentage of the costs of dialysis care and, as a
result, may focus on reducing dialysis payments as their overall costs increase.
Notwithstanding any legislative action, the Company expects that
non-governmental payors will reduce payments for dialysis services. In addition,
as managed care organizations expand, they will aggressively seek to reduce
amounts paid for dialysis treatments. If third-party non-governmental payor
rates are reduced or are no longer subject to price increases or their payment
obligation period is shortened, the Company's business, financial condition and
results of operations would be materially and adversely affected. The Company is
unable to predict the degree of the risk, if any, of reductions in payments from
these sources. In addition, any restriction or reduction of the Company's
ability to charge non-governmental payors for its services at rates in excess of
those paid by Medicare would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Sources of Reimbursement."

OPERATIONS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION. The Company's
operations are subject to extensive and frequently changing regulation by
federal, state and local governments, regarding among other things, licensing,
certifications, financial relationships, fraud and abuse, referrals, direct
employment of health care providers by business corporations, reimbursement and
certain capital expenditures. Some of these laws may restrict or prohibit
business in certain states. See "Business -- Sources of Reimbursement" and
"Business -- Government Regulation."

The Company is subject to the illegal remuneration provisions (the
"anti-kickback statute") of the Social Security Act ("SSA") and similar state
laws which prohibit individuals or entities from offering, paying, soliciting or
receiving remuneration, directly or indirectly, in return for referring an
individual for the furnishing of any item or treatment reimbursed, in whole or
in part, under Medicare, Medicaid or similar state health care programs.
Violations of the anti-kickback statute are punishable by criminal or civil
penalties, which may include, among other things, exclusion or suspension of a
provider from participation in Medicare and Medicaid programs, as well as
substantial fines. In July 1991 and in November 1992, the federal government
published regulations that provide safe harbors for certain business
transactions. Transactions that are structured within the safe harbor provisions
are deemed not to violate the anti-kickback statute. Transactions that do not
satisfy all elements of a relevant safe harbor do not necessarily violate the
statute, but may be subject to greater scrutiny by enforcement

8
11

agencies. The Company endeavors to structure its arrangements with its
physicians and other providers and suppliers to substantially comply with the
anti-kickback statute and similar state laws. However, there can be no assurance
that the relevant enforcement agencies would not take a contrary position. In
addition, certain of the Company's medical directors from whom the Company has
acquired dialysis facilities have received shares of the Company's Common Stock
as consideration for such acquisitions, and such security ownership does not
fall within any of the safe harbors. Although the Company has never been
challenged under these statutes, there can be no assurance that the Company will
not be required to change its practices or relationships with its medical
directors. In the event that any of the Company's relationships with its medical
directors or other referring nephrologists are determined to violate any of
these applicable laws or regulations, or the Company is required to change its
practices or relationships with such nephrologists, there could be a material
adverse effect on the Company's business, financial condition and results of
operations.

The Office of Inspector General (the "OIG") of the Department of Health and
Human Services ("HHS") has previously published warnings that the industry-wide
practices of obtaining discounts on certain laboratory charges and receiving
remuneration from intradialytic parenteral nutrition ("IDPN") suppliers for
services connected with the administration of IDPN therapy at dialysis centers
may violate certain statutory provisions. The Company, like all other dialysis
providers, arranges for laboratory tests and IDPN therapy. Although the
provision of IDPN therapy at the Company's facilities generates only a nominal
amount of revenue, if the OIG were to determine that the Company was in
violation of any of the aforementioned statutory provisions, the Company could
be subject to substantial criminal and civil fines, as well as expulsion or
suspension from the Medicare and Medicaid programs. Such determinations by the
OIG could have a material adverse effect on the Company's business, financial
condition and results of operations.

The Omnibus Budget Reconciliation Act of 1993 includes certain provisions
("Stark II") that restrict physician referrals for certain designated health
services to entities with which the physician or an immediate family member has
a financial relationship. Stark II does not specifically include dialysis
services within the designated health services and the Company believes that the
language and legislative history of Stark II indicate that Congress did not
intend to include dialysis services and certain services and items provided
incident to dialysis services within the legislative prohibition. However,
certain services provided by the Company, including the provision of outpatient
prescription drugs such as EPO, could be construed as designated health services
within the meaning of Stark II. Violations of Stark II are punishable by
repayment of amounts received pursuant to a prohibited referral and civil
penalties, which may include exclusion or suspension of the provider from future
participation in Medicare and Medicaid programs, as well as substantial fines.
Due to the breadth of the statutory provisions and the absence of regulations or
court decisions interpreting the statute, it is possible that the Company's
practices could be challenged under these laws. If Stark II is broadly
interpreted by HCFA to apply to the Company and the Company cannot achieve
compliance, the Company would be subject to the penalties enumerated above,
which could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, there can be no assurance that
federal or state governments will not impose additional restrictions which could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The health care industry in the United States is subject to changing
political, economic and regulatory influences that may impact the Company's
operations and profitability. The Company is unable to predict the effect of any
such changes on its future operations. It is uncertain what legislation or
health care reform will ultimately be implemented or whether other changes in
the administration or interpretation of government health care programs will
occur. There can be no assurance that such changes will not have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Government Regulation."

RISKS INHERENT IN GROWTH STRATEGY. The successful implementation of the
Company's business strategy depends, in part, on the Company's ability to
acquire and develop additional dialysis facilities. Competition for acquisitions
and the recruitment of nephrologists to serve as medical directors for

9
12

de novo facilities in the dialysis industry has increased significantly in
recent years, and as a result, the cost of acquiring or developing dialysis
facilities has increased. No assurance can be given that the Company will make
any additional acquisitions or develop any additional facilities. The Company's
strategy is dependent on: (i) the continued availability of suitable acquisition
candidates, which subjects the Company to the risks inherent in assessing the
value, strengths and weaknesses of acquisition candidates; (ii) identifying
suitable locations and medical directors for de novo facilities; and (iii)
successfully integrating and managing the operations of any acquired companies
and developed facilities. In connection with its acquisition and development
activities, the Company is competing with companies which have significantly
greater financial and management resources. In addition, the Company has limited
experience in completing acquisitions and integrating their operations. The
Company has limited resources and financing available to it and there can be no
assurance that the Company will be able to obtain the necessary financing to
implement its growth strategy on acceptable terms, or at all, or that the
Company would otherwise be successful in acquiring or developing new facilities.
Acquisitions involve a number of special risks, including possible adverse
effects on the Company's operating results, diversion of management's attention,
failure to retain key personnel of the acquired companies, amortization of
acquired intangible assets and risks related to unanticipated events or
liabilities. A failure to implement its growth strategy could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Business Strategy."

DEPENDENCE ON SOLE SUPPLIER FOR EPO. A significant portion of the
Company's revenues are derived from the administration of EPO. EPO is produced
by only one manufacturer. Although the Company has not experienced any
difficulty in obtaining supplies of EPO, there can be no assurance that the
Company will be able to obtain sufficient supplies at reasonable prices or at
all. The interruption of supplies of EPO or a material increase in the cost of
EPO could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Operations."

DEPENDENCE UPON PHYSICIAN REFERRALS. The success of the Company's dialysis
facilities is dependent upon referrals of ESRD patients by nephrologists who
practice in the communities served by these dialysis facilities. It is customary
in the dialysis industry that one or a few physicians account for all or a
significant portion of a facility's patient referral base. The loss of one or
more key referring physicians at a particular facility could have a material
adverse effect on the operations of that facility and could adversely affect the
Company's overall results of operations. Financial relationships with physicians
and other referral sources are highly regulated. The anti-kickback and
self-referral provisions of the SSA, as well as similar state laws, prohibit the
offering, paying and receiving of any remuneration for either making a referral
for a covered service or item, or ordering any such covered service or item, and
prohibit physicians, subject to certain exceptions, from making referrals for
certain health services to entities with which they have a financial
relationship. In the event that any of the Company's relationships with its
referring nephrologists are determined to violate any of these federal
anti-kickback or self-referral provisions, the Company could be subject to
criminal and civil fines, as well as expulsion or suspension from the Medicare
and Medicaid programs. Such result would have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Business Strategy," "Business -- The Dialysis Industry,"
"Business -- Medical Directors" and "Business -- Government Regulation."

INTENSE COMPETITION WITHIN INDUSTRY. The dialysis industry is fragmented
and highly competitive. The Company competes in the dialysis industry for the
acquisition of existing facilities, development of relationships with referring
physicians and development of relationships with nephrologists to serve as
medical directors for de novo facilities. The Company competes with national and
regional health care providers, many of which are larger and have significantly
greater financial and marketing resources than the Company. In addition, there
are also many local independent facilities owned by community physicians,
hospitals and other persons or entities which compete with the Company. The
Company may also experience competition from former medical directors or
referring physicians who open their own dialysis facilities. There can be no
assurance that the Company will be able to compete

10
13

effectively with any such providers. Competition has increased the cost of
acquiring existing facilities and there can be no assurance that these costs
will not continue to increase as a result of future industry consolidation, or
that the Company will be able to compete effectively for such acquisitions.
Furthermore, the Company's dialysis facilities are generally in metropolitan
areas where there are many competing facilities in close proximity. If the
Company is unable to compete for acquisitions or in the recruitment of
nephrologists to serve as medical directors for its facilities, the Company's
growth strategy would be impaired, which could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Competition."

DEPENDENCE UPON KEY PERSONNEL. The Company is dependent upon the services
and management skills of its executives and its medical directors. Although the
Company has entered into employment agreements with its key executives which
include confidentiality and non-competition provisions, there can be no
assurance such individuals will continue in their present capacities with the
Company for any particular period of time, or that the non-competition
provisions will be enforceable or free from limitations under the laws of the
appropriate jurisdictions. The success of the Company and its growth strategy,
will also be dependent on the Company's ability to attract and retain additional
key management, marketing and operating personnel, as well as medical directors
for its dialysis facilities. The Company's facilities are staffed by
professionals with significant experience in the treatment of ESRD. Such persons
are in high demand and are often subject to offers from competitors. There can
be no assurance that the Company will be able to attract and retain such
qualified personnel. The Company does not have, or intend to maintain, key-man
life insurance on any of its personnel. The loss by the Company of any of its
key executives, or the inability to attract and retain qualified management
personnel and medical directors, could have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Competition" and "Management."

DISCRETION IN USE OF PROCEEDS. Following the Offering and after repayment
of certain indebtedness and the funding of planned capital expenditures for the
four facilities under development, the Company will have approximately $11.2
million (approximately $14.5 million if the Underwriters' over-allotment option
is exercised in full) of the net proceeds of the Offering available for
acquisitions, de novo facility development and other unspecified purposes. The
Company's management, subject to approval by the Board of Directors, will have
broad discretion with respect to the use of such proceeds. See "Use of
Proceeds."

POSSIBLE INABILITY TO OBTAIN ADEQUATE INSURANCE. The operation of dialysis
facilities entails certain liability risks. The Company maintains property and
general liability insurance, professional liability insurance on its
professional staff and other insurance which the Company believes to be
appropriate for its operations. There can be no assurance that the Company's
current coverage is adequate or that the Company will be able to maintain such
insurance in the future. Any claim in excess of such insurance coverage could
have a material adverse effect on the Company's business, financial condition
and results of operations. Further, professional liability insurance is
expensive and becoming increasingly difficult to obtain. See
"Business -- Insurance."

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND BY-LAW PROVISIONS. Certain
provisions of the Company's Articles of Incorporation and By-laws may have the
effect of making more difficult or delaying attempts by others to obtain control
of the Company, even when these attempts may be in the best interests of the
shareholders. These provisions include advance notice provisions, provisions
that establish a classified Board of Directors, and provisions that enable the
Board of Directors to issue up to 5,000,000 shares of preferred stock in one or
more series, having terms fixed by the Board of Directors, without shareholder
vote. In addition, Florida has enacted legislation that may deter or inhibit
takeovers of the Company. The Florida Control Share Act generally provides that
in certain circumstances, shares acquired in excess of certain specified
thresholds, starting at 20%, will not possess any voting rights unless such
voting rights are approved by a majority vote of a corporation's disinterested
shareholders. The Florida Affiliated Transactions Act generally requires
super-majority approval by disinterested directors or shareholders of certain
specified transactions between a corpora-

11
14

tion and holders of more than 10% of the outstanding shares of the corporation
or their affiliates. See "Description of Securities -- Anti-Takeover
Provisions."

CONTROL BY EXISTING MANAGEMENT; CONCENTRATION OF OWNERSHIP. Following the
consummation of this Offering, the Company's directors, officers and their
respective affiliates will beneficially own 32.7% of the Company's voting
securities. Although these persons do not have any agreements or understandings
to act or vote in concert, any such agreement, understanding or acting in
concert would make it difficult for others to elect the entire Board of
Directors, or to control the disposition of any matter submitted to a vote of
shareholders. See "Principal Shareholders" and "Description of Securities."

NO PRIOR PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK; POTENTIAL VOLATILITY
OF STOCK PRICE. Prior to this Offering, there has been no public market for the
Company's Common Stock, and there can be no assurance that a liquid trading
market for the Common Stock will develop or, if one develops, that it will be
sustained after the Offering. The initial public offering price of the Common
Stock will be determined by negotiations among the Company and the
representatives of the Underwriters and may not be indicative of the prices that
will prevail in the public market. See "Underwriting." Future trading prices for
the Company's Common Stock will depend on many factors, including, among other
things, the Company's operating results and the market for similar securities.
The market prices for securities of health care services companies, including
companies in the dialysis services sector, have been highly volatile and the
market from time to time has experienced significant price and volume
fluctuations that are unrelated to the operating performance of such companies.
It is likely that the market price of the Company's Common Stock will be highly
volatile. Factors such as announcements of acquisitions or the de novo
development of new dialysis facilities, changes in the Composite Rate, changes
in reimbursement rates charged by the Company to third-party non-governmental
payors and hospitals, changes in the political, economic and regulatory
environment in which the Company operates, releases of reports by security
analysts, as well as period-to-period fluctuations in the Company's operating
results and general market conditions may have a significant impact on the
future price of the Company's Common Stock.

IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS. Investors purchasing
shares of Common Stock in the Offering will experience immediate and substantial
dilution in the net tangible book value of their shares of approximately $4.73
per share. Additional dilution may occur upon the exercise of outstanding
options and warrants. In the event the Company issues additional Common Stock in
connection with future acquisitions or other financing needs, investors in the
Offering may experience further dilution. See "Dilution" and "Shares Eligible
For Future Sale."

ABSENCE OF DIVIDENDS. The Company currently anticipates that it will
retain all future earnings for use in the operation of the business and does not
anticipate paying any dividend on the Common Stock in the foreseeable future.
See "Dividend Policy."

POTENTIAL ADVERSE IMPACT ON FUTURE MARKET PRICE FROM SHARES ELIGIBLE FOR
FUTURE SALE. Sales of substantial amounts of Common Stock (including shares
issuable upon exercise of outstanding options and warrants) in the public market
after this Offering could adversely affect the market price of the Common Stock.
Such sales could also make it more difficult for the Company to sell equity
securities or equity-related securities in the future at a time and price that
the Company deems appropriate. Upon completion of this Offering, the Company
will have outstanding an aggregate of 6,974,247 shares of Common Stock. In
addition, the Company has reserved for issuance 1,145,854 shares issuable upon
exercise of outstanding options and warrants, including the Representatives'
Warrants. The 3,000,000 shares of Common Stock offered hereby will be freely
transferable without restriction or further registration under the Securities
Act of 1933, as amended (the "Securities Act"), except for shares which may be
acquired by affiliates of the Company as that term is defined in Rule 144 under
the Securities Act. The remaining 3,974,247 shares of Common Stock held by
existing shareholders are "restricted securities" as that term is defined in
Rule 144. Restricted securities may be sold in the public market only if they
are registered or if they qualify for exemption from registration under

12
15

Rules 144 or 701 under the Securities Act. Pursuant to certain "lock-up"
agreements, the Company's officers, directors and certain of its shareholders
who collectively hold an aggregate of 3,894,659 shares of Common Stock, together
with the Company, have agreed, for a period of 180 days following the date of
this Prospectus, not to offer, pledge, sell, contract to sell, grant any option
for the sale of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock without the prior written consent of Vector Securities
International, Inc. Following the 180-day period, approximately 1,534,498 shares
of Common Stock will be eligible for sale in the public market without
restriction under Rule 144(k) and an additional 2,360,161 shares will be
eligible for sale subject to certain volume, manner of sale and other
restrictions of Rule 144. Of the approximately 79,588 restricted shares of
Common Stock held by existing shareholders not subject to lock-up agreements,
77,422 shares will be eligible for immediate sale in the public market without
restriction under Rule 144(k). The remaining 2,166 shares of Common Stock not
subject to lock-up agreements will become eligible for sale, subject to volume,
manner of sale and other limitations under Rule 144 commencing 90 days following
the date of this Prospectus. In addition, holders of stock options or warrants,
including the Representatives' Warrants, exercisable for an aggregate of
1,145,854 shares of Common Stock have entered into agreements prohibiting the
sale of the underlying Common Stock for 180 days following the date of this
Prospectus. In addition, the Representatives' are generally prohibited from
selling or otherwise transferring the Representatives' Warrants for twelve
months from the date of this Prospectus. See "Principal Shareholders," "Shares
Eligible for Future Sale" and "Underwriting."

13
16

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 3,000,000 shares of
Common Stock offered hereby are estimated to be approximately $21.8 million
($25.2 million if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $8.00 per share and after deducting
estimated underwriting discounts and commissions and estimated offering expenses
payable by the Company.

The Company intends to use approximately $9.0 million of the net proceeds
of this Offering for the repayment of indebtedness, including: (i) $6.4 million
for the repayment of certain indebtedness incurred under the Company's Senior
Subordinated Secured Loan (the "Subordinated Loan"), including interest and a
prepayment penalty of approximately $63,000; (ii) $2.2 million of certain
indebtedness consisting of $1.5 million under a lease line of credit with an
equipment financing company (the "Lease Line") and $700,000 under other capital
leases; and (iii) approximately $422,000 to redeem a warrant issued in
connection with the Subordinated Loan.

Borrowings under the Subordinated Loan bear interest at the rate of 13% per
annum, payable quarterly. Principal payments are amortized over a three-year
period, payable quarterly, commencing September 30, 1999 with payment in full by
June 30, 2002. The Subordinated Loan is required to be satisfied in full upon
completion of this Offering and will not be available thereafter. The Lease Line
is a credit facility with maximum availability of $6.0 million and is used
primarily to finance dialysis related equipment. Interest accrues at the
five-year U. S. Treasury bond yield rate plus 3.91% (10.12% as of the date of
this Prospectus). Principal and interest are amortized over a five-year period
and payable monthly. The Lease Line will continue to be available to the Company
through its expiration in August 2001. The other capital leases being paid out
of the proceeds of the Offering have similar terms and interest rates as the
Lease Line.

The Company intends to use approximately $1.6 million of the net proceeds
of this Offering to fund leasehold improvements at four dialysis facilities
presently under development. The balance of the net proceeds, approximately
$11.2 million, will be used for acquisitions, de novo facility development,
working capital, including working capital for the facilities under development,
and general corporate purposes. See "Risk Factors -- Discretion in Use of
Proceeds."

Other than as described above, the Company has no current specific plan for
the net proceeds of this Offering. The principal purposes for conducting this
Offering are to: (i) obtain additional capital to permit the Company to pursue
acquisition and de novo development opportunities; (ii) increase the Company's
financial flexibility; (iii) create a public market for the Company's Common
Stock; and (iv) increase the Company's working capital. The Company continually
reviews and evaluates acquisition candidates as part of its growth strategy and
is at various stages of discussion or negotiation with a number of such
candidates. However, as of the date of this Prospectus, the Company has not
entered into an agreement or letter of intent as to any such potential
acquisition.

The foregoing represents the Company's best estimate of the allocation of
the net proceeds from the sale of the Common Stock offered hereby, based upon
the current state of its business operations, its current plans for expansion
and the current economic and industry conditions. Such estimate is subject to
reallocation among the categories stated above. The amount or timing of actual
expenditures will depend on numerous factors, including profitability of the
Company, the availability of alternative financing for acquisitions, the
Company's business development activities and competition. See "Risk
Factors -- Need for Substantial Working Capital" and "Risk Factors -- Dependence
upon Proceeds of Offering; Possible Need for Additional Capital."

Pending such uses set forth above, the Company will invest the net proceeds
of this Offering in short-term, interest bearing, investment-grade securities.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on its Common Stock
since inception. The Company currently intends to retain any future earnings to
finance the growth and development of its business and, therefore, does not
anticipate that any cash dividends will be declared or paid on the Common Stock
in the foreseeable future. Any future determination to pay cash dividends will
be at the discretion of the Board of Directors and will be dependent upon the
Company's financial condition, results of operations, capital requirements,
restrictions under any existing indebtedness and such other factors as the Board
of Directors deems relevant.

The Company's loan agreement with respect to the Line of Credit contains
restrictions on the payment of cash dividends without the lender's prior written
consent.

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17

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1997 and the Company's capitalization as adjusted to reflect the issuance of
3,000,000 shares of Common Stock offered hereby and the receipt and application
of the estimated net proceeds therefrom, assuming an initial public offering
price of $8.00 per share and after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by the Company. This
table should be read in conjunction with the Consolidated Financial Statements
of the Company and the Notes thereto, included elsewhere in this Prospectus. See
"Use of Proceeds" and "Description of Securities."

JUNE 30, 1997(1)
------------------------
PRO FORMA
ACTUAL AS ADJUSTED(2)
------- --------------
(IN THOUSANDS)

Debt:
Current portion of long-term debt and capital lease
obligations............................................ $ 410 $ 7
Line of credit............................................ 1,000 1,000
Long-term debt, excluding current portion................. 6,193 --
Capital lease obligations, excluding current portion...... 1,796 --
Shareholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; no shares issued and outstanding, actual
and pro forma as adjusted.............................. -- --
Common Stock, $.001 par value; 30,000,000 shares
authorized; 3,974,247 shares issued and outstanding,
actual; 6,974,247 shares issued and outstanding, pro
forma as adjusted...................................... 3 6
Additional paid-in capital................................ 9,163 31,000
Accumulated deficit....................................... (5,340) (6,990)
------- -------
Total shareholders' equity............................. 3,826 24,016
------- -------
Total capitalization.............................. $13,225 $25,023
======= =======

- ---------------

(1) Excludes: (i) 355,064 shares issuable upon exercise of options granted
pursuant to the Company's stock option plans, at a weighted average exercise
price of $6.96 per share; (ii) an aggregate of 478,270 shares reserved for
issuance for future grants of options under the Company's stock option
plans; (iii) 49,169 shares issuable upon exercise of options granted to two
of the Company's directors and three other individuals, at a weighted
average exercise price of $6.51 per share; (iv) 441,621 shares reserved for
issuance upon exercise of warrants at a weighted average exercise price of
$6.88 per share; and (v) 300,000 shares issuable upon the exercise of the
Representatives' Warrants. See "Management," "Certain Transactions,"
"Description of Securities" and "Underwriting."

(2) Pro forma as adjusted to give effect to the receipt and application of the
estimated net proceeds from the sale of the 3,000,000 shares offered hereby.
See "Use of Proceeds."

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18

DILUTION

The net tangible book value of the Company as of June 30, 1997 was $1.6
million or $0.40 per share of Common Stock. Net tangible book value per share
represents the amount of the Company's total tangible assets less total
liabilities divided by the number of shares of Common Stock outstanding. Without
taking into account any other changes in net tangible book value other than to
give effect to the sale by the Company of the 3,000,000 shares of Common Stock
offered hereby (assuming an initial public offering price of $8.00 per share)
and the receipt and application of the net proceeds therefrom, the pro forma net
tangible book value of the Company as of June 30, 1997 would have been $22.8
million, or $3.27 per share of Common Stock. This represents an immediate
increase in net tangible book value per share of $2.87 to existing shareholders
and an immediate dilution in net tangible book value of $4.73 per share to
investors in the Offering.

The following table illustrates the per share dilution:

Assumed initial public offering price per share............. $ 8.00
Net tangible book value per share as of June 30, 1997..... $0.40
Increase per share attributable to new investors.......... 2.87
-----
Pro forma net tangible book value per share after the
Offering.................................................. 3.27
------
Dilution per share to new investors......................... $ 4.73
======

The following table summarizes, on a pro forma basis as of June 30, 1997,
the difference between the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
existing shareholders and by new investors, assuming an initial public offering
price of $8.00 per share and before deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by the Company:

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------------

Existing shareholders..... 3,974,247 57.0% $ 9,166,000 27.6% $ 2.31
New investors............. 3,000,000 43.0 24,000,000 72.4 8.00
--------- ----- ----------- -----
Total........... 6,974,247 100.0% $33,166,000 100.0%
========= ===== =========== =====

The foregoing table assumes no exercise of the Underwriters' over-allotment
option or shares underlying outstanding options or warrants. As of the date of
this Prospectus, there were: (i) 355,064 shares issuable upon exercise of
options granted pursuant to the Company's stock option plans, at a weighted
average exercise price of $6.96 per share; (ii) an aggregate of 478,270 shares
reserved for issuance for future grants of options under the Company's stock
option plans; (iii) 49,169 shares issuable upon exercise of options granted to
two of the Company's directors and three other individuals, at a weighted
average exercise price of $6.51 per share; (iv) 441,621 shares reserved for
issuance upon exercise of warrants at a weighted average exercise price of $6.88
per share; and (v) 300,000 shares issuable upon the exercise of the
Representatives' Warrants. See "Management," "Certain Transactions,"
"Description of Securities" and "Underwriting."

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19

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following selected consolidated financial and operating data of the
Company are qualified in their entirety by, and should be read in conjunction
with, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Company's Consolidated Financial Statements and the Notes
thereto appearing elsewhere in this Prospectus. The statement of operations data
for the years ended December 31, 1994, 1995 and 1996 and the balance sheet data
as of December 31, 1995 and 1996 are derived from the audited Consolidated
Financial Statements included elsewhere in this Prospectus. The statement of
operations data for the period from inception to December 31, 1993 and the
balance sheet data as of December 31, 1993 and 1994 are derived from audited
consolidated financial statements not included in this Prospectus. The
consolidated statements of operations data for the six months ended June 30,
1996 and 1997 and the consolidated balance sheet data at June 30, 1997 have been
derived from unaudited interim financial statements and include all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial position and results of
operations at that date and for such periods. The operating results for the six
months ended June 30, 1997 are not necessarily indicative of the results to be
expected for the full year or for any future period. Comparability of the
information presented below as to each period is substantially affected by the
timing of acquisitions and opening of de novo facilities. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

PERIOD FROM
INCEPTION
(JULY 7, 1993) SIX MONTHS ENDED
TO YEARS ENDED DECEMBER 31, JUNE 30,
DECEMBER 31, --------------------------------- ---------------------
1993 1994 1995 1996 1996 1997
-------------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT SHARE AND OPERATING DATA)

STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ -- $2,746 $ 8,794 $18,569 $8,320 $12,432
Operating expenses:
Facilities......................... -- 2,405 6,809 14,625 6,354 9,679
General and administrative......... 355 1,025 1,682 2,681 1,163 1,304
Provision for doubtful accounts.... -- 93 495 1,293 561 493
Depreciation and
amortization..................... 2 126 509 1,642 577 787
--------- --------- --------- --------- --------- ---------
Operating income (loss)....... (357) (903) (701) (1,672) (335) 169
--------- --------- --------- --------- --------- ---------
Other income (expenses):
Gain (loss) on sale of assets...... -- -- -- 364 -- (27)
Net interest income
(expense)........................ 35 61 (360) (915) (419) (537)
Amortization of deferred financing
costs............................ -- -- (126) (226) (108) (108)
--------- --------- --------- --------- --------- ---------
Net (loss)........................... $(322) $ (842) $(1,187) $(2,449) $ (862) $ (503)
========= ========= ========= ========= ========= =========
Net (loss) per common share(1)....... $ (.13) $ (.31) $ (.40) $ (.66) $ (.25) $ (.12)
========= ========= ========= ========= ========= =========
Weighted average number of shares
outstanding........................ 2,395,835 2,759,884 2,963,193 3,693,617 3,503,664 4,067,747
========= ========= ========= ========= ========= =========
PRO FORMA DATA:
Pro forma net (loss)(2).............. $(3,693) $(1,738)
========= =========
Pro forma net (loss) per common
share(2)........................... $ (.76) $ (.33)
========= =========
Shares used in computation of pro
forma net (loss) per common
share(3)........................... 4,861,062 5,235,192
========= =========
OPERATING DATA:
Patients (at period end)(4).......... -- 142 319 691 530 791
Treatments(5)........................ -- 10,260 33,702 77,919 34,877 52,964
Number of facilities (at period
end)(6)............................ -- 4 7 12 10 12

(Footnotes on following page)

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JUNE 30, 1997
DECEMBER 31, ------------------------
----------------------------------- PRO FORMA
1993 1994 1995 1996 ACTUAL AS ADJUSTED(7)
------ ------ ------- ------- ------- --------------
(IN THOUSANDS)

BALANCE SHEET DATA:
Current assets............................. $3,543 $2,527 $ 5,234 $ 6,059 $ 7,551 $18,807
Working capital............................ 3,503 2,136 3,051 2,389 3,271 14,930
Total assets............................... 3,642 4,020 11,815 15,161 17,095 28,893
Total debt................................. -- 220 6,375 7,743 9,399 1,007
Total shareholders' equity................. 3,603 3,482 4,164 4,317 3,826 24,016

- ---------------

(1) See Note 1 of Notes to Consolidated Financial Statements for information
concerning the computation of net (loss) per share.

(2) Pro forma statement of operations information is presented to give effect to
the sale of the 3,000,000 shares offered hereby and the receipt and
application of approximately $9.0 million of the net proceeds therefrom for
repayment of certain indebtedness, including $422,000 for redemption of a
warrant issued in connection with a portion of such indebtedness. The
redemption of this warrant, together with the non-cash write-off of deferred
financing costs related to repayment of certain of the indebtedness will
result in a one-time charge of approximately $1.5 million. See "Use of
Proceeds."

(5) Treatments include all dialysis treatments performed in outpatient
facilities, patients' homes and hospitals. Peritoneal dialysis treatments
are stated in hemodialysis equivalents. See "Business -- Operations."

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH "SELECTED
CONSOLIDATED FINANCIAL AND OPERATING DATA" AND THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS AND NOTES THERETO, INCLUDED ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS,"
AS WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.

OVERVIEW

Renex, which was established in July 1993 and operates through its
wholly-owned subsidiaries, is a high quality provider of dialysis and ancillary
services to patients with ESRD. Since inception, the Company has implemented an
aggressive growth strategy designed to build the Company's presence in selected
regional markets. A key element of the Company's growth strategy has been to
establish local clusters of dialysis facilities within strong regional networks
through de novo development. To date, Renex has grown primarily through de novo
development because the Company believes such a strategy minimizes the initial
capital outlay. However, de novo facilities achieve profitability only when they
reach sufficient utilization, which historically does not occur prior to twelve
to fourteen months following opening. The Company has increased utilization in
its existing facilities from an average of 41% at December 31, 1994 to an
average of 72% at June 30, 1997 primarily through marketing efforts directed at
local nephrologists, patients and managed care organizations. See "Risk
Factors -- Lack of Full Facility Utilization."

Additionally, Renex has grown through acquisitions and hospital alliances.
In the future, the Company believes that its growth will be through a
combination of acquisitions and de novo development, which will allow expansion
of its regional market presence and provide entry into new regional markets.

As of August 31, 1997, the Company operated twelve outpatient dialysis
facilities, of which eight were opened between 1994 and 1996 through de novo
development. In addition, the Company acquired three facilities in December
1995. In April 1996, the Company acquired the assets of two facilities under
development. The Company opened one of these facilities during the first quarter
of 1997 and the second facility is expected to open during the first quarter of
1998, subject to receipt of applicable state approvals. The Company sold an
additional de novo facility, not included above, in September 1996 because it
did not satisfy the Company's strategic objectives.

SOURCES OF NET REVENUES

The Company's net revenue is derived primarily from five sources: (i)
outpatient hemodialysis services; (ii) the administration of EPO and, to a
lesser extent, other ancillary services; (iii) peritoneal dialysis services;
(iv) home hemodialysis services; and (v) inpatient hemodialysis services to
hospitalized patients. Services generally include the provision of equipment and
supplies. The Company's dialysis and ancillary services are reimbursed primarily
under the Medicare ESRD program in accordance with rates established by HCFA.
Medicare reimbursement is subject to rate and other legislative changes by
Congress and periodic changes in regulations, including changes that may reduce
payments under the ESRD program. Payments are also provided by Medicaid,
patients and non-governmental third-party payors for the first three to 33
months of treatment as mandated by law. Payments made by non-governmental
third-party payors are generally at rates higher than the Composite Rate. Rates
paid for services provided to hospitalized patients are negotiated with
individual hospitals. For the year ended December 31, 1996 and the six months
ended June 30, 1997, approximately 67% and 76%, respectively of the Company's
net revenues were derived from reimbursement by Medicare and Medicaid. The
Company will continue to be dependent upon revenue from Medicare and Medicaid.
Since dialysis is an ongoing, life sustaining therapy used to treat a chronic
condition, use of the Company's services is generally predictable and not
subject to seasonal or economic fluctuation.

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However, the Company's interim and annual results of operations may be
significantly affected by the timing and costs of any acquisitions or de novo
facilities. See "Risk Factors -- Dependence upon Government Reimbursement."

In connection with the Offering the Company will redeem warrants issued in
connection with the Subordinated Loan which together with the non-cash write-off
of deferred financing costs related to the repayment of such loan will result in
a one time charge of approximately $1.5 million.

RESULTS OF OPERATIONS

The following table sets forth certain income statement items expressed as
a percentage of net revenues for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1996 and 1997:

SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------ ---------------
1994 1995 1996 1996 1997
------ ------ ------ ------ ------

Net revenues......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------ ------
Facilities expenses.................................. 87.6 77.4 78.8 76.4 77.9
General and administrative expenses.................. 37.3 19.1 14.4 14.0 10.5
Provision for doubtful accounts...................... 3.4 5.6 7.0 6.7 4.0
Depreciation and amortization expenses............... 4.6 5.8 8.8 6.9 6.3
Operating income (loss).............................. (32.9) (8.0) (9.0) (4.0) 1.4
Net interest income (expense)........................ 2.2 (4.1) (4.9) (5.0) (4.3)
Net (loss)........................................... (30.7) (13.5) (13.2) (10.4) (4.1)

SIX MONTHS ENDED JUNE 30, 1997 AND 1996

NET REVENUES. Net revenues for the six months ended June 30, 1997 were
$12.4 million compared to $8.3 million for the same period in 1996, representing
an increase of 49.4%. The increase in net revenues of $4.1 million was primarily
attributable to the continued growth at existing facilities of $2.2 million and
to a full six months' net revenues totalling $1.9 million in 1997 for the two
facilities opened during the fourth quarter of 1996.

FACILITIES EXPENSES. Facilities expenses primarily consist of costs and
expenses specifically attributable to the operation of the dialysis facilities,
including operating and maintenance costs of such facilities and all labor,
supplies and service costs related to patient care. Facilities expenses for the
six months ended June 30, 1997 were $9.7 million compared to $6.4 million for
the same period in 1996, representing an increase of 52.3%. The increase in
facilities expenses was due to the greater number of facilities in operation in
1997. As a percentage of net revenues, facilities expenses increased to 77.8%
for the six months ended June 30, 1997 from 76.4% for the same period in 1996.
The increase as a percentage of net revenues was due to low patient utilization
at one of the Company's newer facilities and a change in the payor mix related
to peritoneal dialysis patients.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist of headquarter expenses including marketing, finance, operations
management, legal, quality assurance, information systems, billing and
collections and centralized accounting support. General and administrative
expenses for the six months ended June 30, 1997 were $1.3 million compared to
$1.2 million for the same period in 1996, representing an increase of 12.1%. The
increase in general and administrative expenses was due to increased personnel
and related expenses to support the greater number of facilities in operation.
As a percentage of net revenues, general and administrative expenses decreased
to 10.5% for the six months ended June 30, 1997 from 14.0% for the same period
in 1996. The decrease as a percentage of net revenues was due to an increase in
net revenues from increased utilization of existing facilities which did not
require a proportionate increase in corporate overhead.

PROVISION FOR DOUBTFUL ACCOUNTS. The provision for doubtful accounts is a
function of patient payor mix, collection experience and other factors. It is
the Company's practice to reserve for doubtful accounts in the period in which
revenue is recognized based on management's estimate of the net collectibility
of accounts receivable. The provision for doubtful accounts for the six months
ended June 30, 1997 was $493,000 compared to $561,000 for the same period in
1996, representing a decrease

20
23

of 12.1%. As a percentage of net revenues, the provision for doubtful accounts
decreased to 4.0% for the six months ended June 30, 1997 from 6.7% for the same
period in 1996. The decrease was primarily due to an improved account evaluation
process and an increased emphasis upon collections of aged amounts.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses for the six months ended June 30, 1997 were $787,000 compared to
$577,000 for the same period in 1996, representing an increase of 36.4%. The
increase was due to capital expenditures related to the opening of two
facilities and the addition of reuse capabilities at the majority of the
existing facilities. As a percentage of net revenues, depreciation and
amortization expenses decreased to 6.3% for the six months ended June 30, 1997
from 6.9% for the same period in 1996. The decrease as a percentage of revenues
was due to increased revenues at existing facilities without a corresponding
increase in capital expenditures.

NET INTEREST INCOME (EXPENSE). Net interest expense for the six months
ended June 30, 1997 was $537,000 compared to $419,000 for the same period in
1996, representing an increase of 28.2%. The increase of $82,000 was primarily
due to the increase in the Company's borrowings for working capital purposes. In
June 1995, the Company entered into the Subordinated Loan, which permitted
borrowings, under certain circumstances, of up to $12.5 million, of which the
initial borrowing was $4.8 million and in May 1996 an additional $1.5 million
was borrowed. As of June 30, 1997 and 1996, $6.3 million was outstanding.

NET (LOSS). The Company had a net loss of $503,000 for the six months
ended June 30, 1997 compared to a net loss of $862,000 for the same period in
1996, a decrease of $359,000, or 41.7%.

YEARS ENDED DECEMBER 31, 1996 AND 1995

NET REVENUES. Net revenues for the year ended December 31, 1996 were $18.6
million compared to $8.8 million for the same period in 1995, representing an
increase of 111.2%. The increase in net revenues of $9.8 million was primarily
attributable to a full year's net revenues of $4.3 million in 1996 for three
facilities opened in 1995 which only had $900,000 of revenues in 1995, the
acquisition in December 1995 of three facilities representing $3.6 million and
the continued growth at existing facilities of $2.7 million.

FACILITIES EXPENSES. Facilities expenses for the year ended December 31,
1996 were $14.6 million compared to $6.8 million for the same period in 1995,
representing an increase of 114.8%. The increase was due to the greater number
of facilities in operation in 1996. As a percentage of net revenues, facilities
expenses increased to 78.8% for the year ended December 31, 1996 from 77.4% for
the same period in 1995. The increase as a percentage of revenues was due to the
lack of full patient utilization in 1996 at the facilities opened in 1995.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the year ended December 31, 1996 were $2.7 million compared to $1.7 million
for the same period in 1995, representing an increase of 59.4%. The increase was
due to increased personnel and related expenses to support the greater number of
facilities in operation. As a percentage of net revenues, general and
administrative expenses decreased to 14.4% for the year ended December 31, 1996
from 19.1% for the same period in 1995. The decrease as a percentage of revenues
was due to an increase in net revenues from increased utilization of existing
facilities which did not require a proportionate increase in corporate overhead.

PROVISION FOR DOUBTFUL ACCOUNTS. The provision for doubtful accounts for
the year ended December 31, 1996 was $1.3 million compared to $495,000 for the
same period in 1995, representing an increase of 161.2%. As a percentage of net
revenues, the provision for doubtful accounts increased to 7.0% for the year
ended December 31, 1996 from 5.6% for the same period in 1995. This increase was
due to increased revenue, a continuing evaluation of the collectible amounts
outstanding and an increase in Medicare patients without secondary insurance
resulting from the acquisition of three facilities in December 1995.

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24

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses for the year ended December 31, 1996 were $1.6 million compared to
$509,000 for the same period in 1995, representing an increase of 222.6%. As a
percentage of net revenues, depreciation and amortization expenses increased to
8.8% for the year ended December 31, 1996 from 5.8% for the same period in 1995.
This increase was due to the amortization and write-off of certain intangible
assets associated with the acquisition in 1996 of two facilities under
development and the acquisition and opening of new facilities in 1995.

NET INTEREST INCOME (EXPENSE). Net interest expense for the year ended
December 31, 1996 was $915,000 compared to $360,000 for the same period in 1995,
representing an increase of 154.2%. The increase of $555,000 was primarily due
to the increase in the Company's borrowings for working capital purposes.
Pursuant to the Subordinated Loan, $6.3 million and $4.8 million were
outstanding as of December 31, 1996 and 1995, respectively.

NET (LOSS). The Company had a net loss of $2.4 million for the year ended
December 31, 1996 compared to a net loss of $1.2 million for the same period in
1995, an increase of $1.2 million, or 106.3%.

YEARS ENDED DECEMBER 31, 1995 AND 1994

NET REVENUES. Net revenues for the year ended December 31, 1995 were $8.8
million compared to $2.7 million for the same period in 1994, an increase of
220.3%. The increase in net revenues of $6.1 million was primarily attributable
to an increase in utilization at facilities opened in 1994 totalling $4.9
million and facilities opened in 1995 totalling $1.1 million.

FACILITIES EXPENSES. Facilities expenses for the year ended December 31,
1995 were $6.8 million compared to $2.4 million for the same period in 1994,
representing an increase of 183.1%. The increase was due to the greater number
of facilities in operation in 1995. As a percentage of net revenues, facilities
expenses decreased to 77.4% for the year ended December 31, 1995 from 87.6% for
the same period in 1994. The decrease as a percentage of revenues was primarily
due to increased patient utilization at existing facilities.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the year ended December 31, 1995 were $1.7 million compared to $1.0 million
for the same period in 1994, representing an increase of 64.1%. The increase was
due to increased personnel and related expenses to support the greater number of
facilities in operation. As a percentage of net revenues, general and
administrative expenses decreased to 19.1% for the year ended December 31, 1995
from 37.3% for the same period in 1994. The decrease as a percentage of revenues
was primarily due to increases in net revenues from increased patient
utilization of existing facilities which did not require a proportionate
increase in corporate overhead.

PROVISION FOR DOUBTFUL ACCOUNTS. The provision for doubtful accounts for
the year ended December 31, 1995 was $495,000 compared to $93,000 for the same
period in 1994, representing an increase of 432.3% . As a percentage of net
revenues, the provision for doubtful accounts increased to 5.6% for the year
ended December 31, 1995 from 3.4% for the same period in 1994. This increase was
due to increased revenues and the Company's evaluation of the collectible
amounts outstanding.

DEPRECIATION AND AMORTIZATION EXPENSES. Depreciation and amortization
expenses for the year ended December 31, 1995 were $509,000 compared to $126,000
for the same period in 1994, representing an increase of 304.0%. As a percentage
of net revenues, depreciation and amortization expenses increased to 5.8% for
the year ended December 31, 1994 from 4.6% for the same period in 1994. This
increase was due to increased depreciation expenses resulting from the
development and opening of four facilities in 1995.

NET INTEREST INCOME (EXPENSE). Net interest expense for the year ended
December 31, 1995 was $360,000 compared to net interest income of $61,000 for
the same period in 1994, representing an increase of 690.2%. The increase of
$421,000 was primarily due to the increase in the Company's

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25

borrowings for working capital and expansion purposes. The Company entered into
the Subordinated Loan in June 1995. At December 31, 1995, the Company had
borrowed $4.8 million on such loan.

NET (LOSS). The Company had a net loss of $1.2 million for the year ended
December 31, 1995 compared to a net loss of $842,000 for the same period in
1994, an increase of $345,000, or 41.0%.

LIQUIDITY AND CAPITAL RESOURCES

The Company requires capital for maintenance, refurbishing and expansion of
existing facilities, acquisitions, de novo developments, the integration of
newly developed and acquired facilities and working capital and general
corporate purposes. As of June 30, 1997, the Company had working capital of
approximately $3.3 million, of which $781,000 consisted of cash and cash
equivalents, compared to working capital and cash and cash equivalents of $2.4
million and $952,000 respectively at December 31, 1996. The Company intends to
finance its working capital requirements, as well as purchases of additional
equipment and leasehold improvements, from cash generated from operations, the
Company's secured line of credit ("Line of Credit"), the Lease Line, and through
the net proceeds of the Offering.

Net cash used in operating activities was $238,000 and $956,000 for the six
months ended June 30, 1997 and for the year ended December 31, 1996,
respectively. Net cash used in operating activities consists of the Company's
net loss, decreased by non-cash expenses such as depreciation, amortization and
the provision for doubtful accounts and adjusted by changes in components of
working capital, primarily accounts receivable. During 1996, the Company
performed an extensive review of its aged accounts receivable, including those
of acquired facilities, and adjusted amounts to expected collectibility, causing
the allowance for doubtful accounts to increase to 22% of gross receivables at
December 31, 1996 from 10% at December 31, 1995. Furthermore, an increased
emphasis upon collections of aged amounts resulted in the Company improving its
days sales outstanding from 125 to 114 to 106 days for the years ended December
31, 1995, 1996 and the six months ended June 30, 1997, respectively.

Once a de novo facility is operational, the Company is unable to bill for
services until it receives a Medicare provider number and the Medicare
intermediary installs its electronic billing software at the facility. For these
reasons, there is generally a 90-day delay before the Company will receive
payment on its initial services at such facility. The dialysis industry is
characterized by long collection cycles because Medicaid and private insurance
carriers require substantial documentation to support reimbursement claims and
often take a substantial amount of time to process claims. As a result, the
Company requires significant working capital to cover expenses during the
collection process. See "Risk Factors -- Need for Substantial Working Capital."

Net cash used in investing activities was $587,000 and $1.6 million for the
six months ended June 30, 1997 and the year ended December 31, 1996,
respectively. The Company's principal uses of cash in investing activities have
been related to purchases of new equipment and leasehold improvements for the
Company's existing facilities and the cost of development of additional
facilities. Currently, the four de novo facilities under various stages of
development have planned openings between the fourth quarter of 1997 and the
first quarter of 1998. These facilities require substantial cash outlay for
construction of leasehold improvements. The Company estimates that this
construction will cost approximately $1.8 million, of which the Company
anticipates using $1.6 million from the net proceeds of this Offering. The
balance of the cost of leasehold improvements will be obtained from borrowings
under the Company's Line of Credit. Additionally, the Company estimates that it
will finance approximately $1.2 million in equipment for these four facilities
through its Lease Line. See "Business -- Operations."

Net cash provided by financing activities for the six months ended June 30,
1997 was $654,000. This consisted primarily of $1.0 million from the Company's
Line of Credit, offset by payments on capital lease obligations. Net cash
provided by financing activities for the year ended December 31, 1996 was $2.3
million. The principal sources of cash from financing activities were $1.5
million in

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26

proceeds from the Company's Subordinated Loan and equity financings aggregating
$1.8 million through the sale of Series B Preferred Stock (net of redemptions)
and Common Stock in the year ended December 31, 1996. The proceeds from these
financings were reduced by payments of various debt obligations.

The Company has a Subordinated Loan which bears interest at 13.0% and
permitted borrowings of up to $12.5 million under certain circumstances during
the first two years of the term. The term for additional borrowing expired on
June 5, 1997. The Subordinated Loan contains certain restrictive covenants,
including financial covenants as to minimum net worth, leverage, and cash flows.
The Company was in default of the minimum net worth and cash flows covenants as
of December 31, 1995 and obtained a waiver of these defaults through April 30,
1996. Effective May 1, 1996, the Subordinated Loan agreement was revised as to
the minimum net worth and cash flows covenants. The Company was in default of
the cash flows covenant as of December 31, 1996 and obtained a waiver of this
default through December 31, 1996. Effective January 1, 1997, the Subordinated
Loan agreement was further revised as to the minimum net worth and cash flows
covenants. As of June 30, 1997, the Company was in compliance with the financial
covenants of the revised Subordinated Loan agreement. As of June 30, 1997 and
December 31, 1996, the Company had borrowed approximately $6.3 million on the
Subordinated Loan which will be repaid out of the net proceeds of the Offering.
Upon completion of this Offering, the outstanding balance and accrued interest
of the Subordinated Loan is required to be satisfied and the Subordinated Loan
will be terminated. See "Use of Proceeds."

The Company has a $4.0 million secured Line of Credit. Borrowings under the
Line of Credit are limited to 80% of the net collectible value of eligible
accounts receivable. As of June 30, 1997 and August 31, 1997, the borrowing base
availability was approximately $3.0 million, of which $1.0 million was
outstanding. The Line of Credit bears interest on the outstanding balance at the
prime rate, plus 2.0% (10.5% as of the date of this Prospectus). The Line of
Credit is for the development of dialysis facilities and for working capital and
general corporate purposes and is secured by the Company's accounts receivable.
The Line of Credit contains financial covenants relating to the maintenance of a
minimum net worth and specified net worth to debt ratios. These covenants do not
permit the sum of subordinated debt plus tangible net worth to be less than
$6,000,000 and do not permit the ratio of total liabilities minus subordinated
debt divided by tangible net worth plus subordinated debt to be greater than
1.2:1. As of June 30, 1997, the Company was in compliance with the financial
covenants contained in the Line of Credit. The Line of Credit also requires the
lender's approval for any acquisitions in excess of $5,000,000 in the aggregate
in any calendar year and for the payment of cash dividends. The Line of Credit
will continue to be available following completion of this Offering through its
expiration in August 1998.

The Company also has available a $6.0 million Lease Line with an equipment
financing company. The Lease Line is used primarily to finance dialysis related
equipment and furnishings at the Company's facilities and bears interest at the
five year U. S. Treasury bond yield rate plus 3.91% (10.12% as of the date of
this Prospectus). As of June 30, 1997 and December 31, 1996, the Company had
borrowed approximately $1.5 million on the Lease Line. The outstanding balance
on the Lease Line will be repaid out of the net proceeds of the Offering.
However, the Lease Line will continue to be available to the Company through its
expiration in August 2001.

The Company's long-term capital requirements will depend on numerous
factors, including the rate at which the Company develops or acquires new
facilities. In addition, the Company has various on-going needs for capital,
including: (i) working capital for operations (including financing receivables
as previously described); and (ii) routine capital expenditures for the
maintenance of facilities, and equipment and leasehold improvements. In order to
implement the Company's long-term growth strategy, the Company anticipates that
capital requirements will increase substantially from historical levels.

The Company anticipates that the consideration paid for the acquisition of
new facilities will consist of cash, promissory notes, assumption of liabilities
and/or the issuance of Common Stock or securities convertible into Common Stock.
The Company believes that the net proceeds of the Offering,

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27

together with the Line of Credit, the Lease Line and internally generated funds,
will be sufficient to fund the Company's operations and to finance the Company's
growth strategy through the next 18 months. However, there can be no assurance
that the Company will not require substantial additional funds prior to such
time. See "Risk Factors -- Dependence upon Proceeds of Offering; Possible Need
for Additional Capital."

INCOME TAX LOSS CARRYFORWARDS

As of December 31, 1996, the Company had approximately $6.7 million of net
operating loss carryforwards that may be available to offset future taxable
income for federal income tax purposes. These net operating loss carryforwards
begin to expire in 2008. The Common Stock to be issued in connection with the
Offering should not materially limit the Company's utilization of its net
operating loss carryforwards.

POTENTIAL IMPACT OF INFLATION

A majority of the Company's net revenue is subject to reimbursement rates
which are regulated by the federal government and do not automatically adjust
for inflation. These reimbursement rates are adjusted periodically based on
certain factors, including Congressional budget limitations, inflation, consumer
price indexes and costs incurred in rendering the services. Historically,
adjustments to reimbursement rates have had little relation to the actual cost
of doing business.

The Company is not able to increase the amounts it bills for services
provided by its operations that are subject to Medicare and Medicaid
reimbursement rates. Operating costs, such as labor and supply costs, are
subject to inflation without corresponding increases in reimbursement rates.
Such increases may be significant and have a material adverse effect on the
Company's results of operations.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, Earnings Per Share. This
statement establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly held common stock or potential
common stock. This statement is effective for financial statements issued for
periods ending after December 15, 1997, and earlier application is not
permitted. This statement requires restatement of all prior-period EPS data
presented. The Company will adopt SFAS 128 in the fourth quarter of the year
ending December 31, 1997. The pro forma basic (loss) per share and diluted
(loss) per share calculated in accordance with SFAS 128 for the fiscal years
ended December 31, 1994, 1995 and 1996, and the six months ended June 30, 1997,
are as follows:

SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- --------------
1994 1995 1996 1996 1997
------ ------ ------ ----- -----

Pro forma basic (loss) per share............. $(.48) $(.61) $(.84) $(.35) $(.13)
Pro forma diluted (loss) per share........... $(.48) $(.61) $(.84) $(.35) $(.13)

Other recently issued accounting standards may affect the Company's
Consolidated Financial Statements in the future. See Consolidated Financial
Statements and Notes thereto.

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BUSINESS

Renex Corp. ("Renex" or the "Company"), which was established in July 1993,
is a high quality provider of dialysis and ancillary services to patients
suffering from chronic kidney failure, generally referred to as end stage renal
disease ("ESRD"). The Company has grown primarily through de novo development
and more recently through acquisitions, and seeks to distinguish itself on the
basis of quality patient care and responsiveness to the professional needs of
its referring nephrologists. The Company currently provides dialysis services to
approximately 800 patients in seven states, through twelve outpatient dialysis
facilities and two staff-assisted home dialysis programs. Each outpatient
facility is operated through a separate wholly-owned subsidiary. Additionally,
the Company provides inpatient dialysis services at five hospitals. The Company
intends to accelerate the penetration of its existing markets through a
combination of acquisitions and de novo development and to enter new markets,
primarily through acquisitions, in which the Company believes it can establish
significant market share over time.

THE DIALYSIS INDUSTRY

END STAGE RENAL DISEASE

ESRD is the state of advanced chronic kidney disease that is characterized
by the irreversible loss of kidney function. A normal human kidney removes waste
products and excess water from the blood, preventing water overload, toxin
buildup and eventual poisoning of the body. Chronic kidney disease can be caused
by a number of conditions, including inherited diseases, diabetes, hypertension
and other illnesses. Patients suffering from ESRD require routine dialysis
treatments or kidney transplantation to sustain life. Transplantation is
severely limited due to scarcity of suitable organ donors, the incidence of
organ transplant rejection and the ineligibility of many ESRD patients for
transplantation due to health and age. As a result, the vast majority of ESRD
patients must rely on dialysis for the remainder of their lives.

According to the Health Care Financing Administration ("HCFA"), the number
of patients requiring chronic kidney dialysis services in the United States has
increased from 66,000 patients in 1982 to over 200,000 patients in 1995.
According to the National Institutes of Health, the number of ESRD patients is
projected to reach 300,000 by the year 2000. HCFA estimates that the national
incidence rate of new cases of ESRD in 1995 was approximately 253 patients per
million when considering all age groups, but was 1,097 patients per million in
individuals age 65 to 74, and 1,035 patients per million in individuals age 75
and over. The Company attributes the growth in the number of ESRD patients
principally to: (i) the aging of the U.S. population; (ii) better treatment and
longer survival of patients suffering from diabetes, hypertension, and other
illnesses that lead to ESRD; and (iii) improved dialysis technology which has
enabled dialysis to be provided to older patients and patients who previously
could not tolerate dialysis due to their physical condition.

According to HCFA, total spending for ESRD in the United States in 1995 was
an estimated $13.1 billion, of which Medicare paid an estimated $9.7 billion.
The Company estimates that approximately $6.0 billion of the $13.1 billion was
spent on dialysis and ancillary services. Since 1972, most ESRD patients in the
United States have been entitled to Medicare benefits, regardless of age or
financial circumstances. Currently, 93% of all ESRD patients in the United
States are receiving Medicare reimbursement for treatment.

NEPHROLOGISTS

Nephrology is a subspecialty within the specialty of internal medicine.
Nephrologists specialize in the management of all forms of kidney-related
ailments and the administration of related services. Nephrologists typically are
the primary care physicians for ESRD patients. As specialists, nephrologists
provide consultation services to other physicians' patients who suffer from
kidney-related ailments. They also examine and treat pre-ESRD patients.
Nephrologists serve as the primary gatekeepers of ESRD patients and, in
consultation with their patients, play a significant role in determining which
dialysis facilities and hospitals will be used by such patients. While managed
care directs a small

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minority of these patients (estimated by HCFA at 3% in 1995), nephrologists
direct the vast majority of patients.

DIALYSIS FACILITIES; TREATMENTS AND STAFF

FACILITIES. Patients with ESRD generally receive dialysis treatment
through a dialysis facility, which may be a free-standing or a hospital-based
outpatient facility. Most dialysis facilities offer a range of services to ESRD
patients, including: dialysis treatments; provision of supplies and equipment;
patient, family and community training and education; insurance counseling;
billing services; dietary counseling and social services support. In 1995, there
were over 2,800 dialysis facilities in the United States, of which approximately
71% were free-standing and approximately 29% were hospital-based outpatient
facilities. The primary function of dialysis facilities is to provide ESRD
patients with life sustaining kidney dialysis, including both hemodialysis and
peritoneal dialysis. Patient care is provided by a team of dialysis
professionals.

HEMODIALYSIS. HCFA estimates that as of December 31, 1995, approximately
84% of ESRD patients in the United States were receiving hemodialysis treatments
(83% in outpatient facilities and 1% in the home). Hemodialysis uses an
artificial kidney, called a dialyzer, to remove certain toxins and fluid from
the patient's blood and a machine to control external blood flow and to monitor
certain vital signs of the patient. Hemodialysis patients are connected to a
dialysis machine via a vascular access device. The dialysis process occurs
across a semipermeable membrane that divides the dialyzer into two distinct
chambers. While the blood is circulated through one chamber, a premixed
dialysate solution is circulated through the other chamber. The toxins and
excess fluid from the blood cross the membrane into the dialysate solution. A
typical hemodialysis treatment lasts three to four hours and is administered
three times per week. During the dialysis procedure, patients generally remain
seated next to the hemodialysis machine, but are able to read, watch television
(if available) or converse with other patients or clinic staff. Most clinics
provide some flexibility in scheduling (such as evening and weekend hours) to
minimize disruption to the patients' lives. In certain cases, hemodialysis may
also be performed at home for patients who are medically suitable and have a
willing and capable assistant. Home hemodialysis requires training for both the
patient and the caregiver, and requires monitoring by a designated outpatient
facility.

PERITONEAL DIALYSIS. As of December 31, 1995, HCFA estimates that
approximately 16% of all ESRD patients were receiving peritoneal dialysis in the
home, under the supervision of an outpatient facility. There are several
variations of peritoneal dialysis. The most common forms are continuous
ambulatory peritoneal dialysis ("CAPD") and continuous cycling peritoneal
dialysis ("CCPD"). All forms of peritoneal dialysis use the patient's peritoneal
(abdominal) cavity to eliminate fluid and toxins from the patient's blood. CAPD
utilizes a sterile, pharmaceutical grade dialysate solution, which is introduced
into the patient's peritoneal cavity through a surgically implanted catheter.
Toxins in the blood continuously cross the peritoneal membrane into the
dialysate solution. After several hours, the patient must drain and replace the
fluid. CCPD is performed in a manner similar to CAPD but utilizes a mechanical
device to cycle the dialysate solution while the patient is sleeping. Peritoneal
dialysis patients are closely monitored by the designated dialysis facility,
either through periodic (at least monthly) visits to the facility or through
visits to the patient's home by a dialysis facility nurse.

PATIENT CARE PROFESSIONALS. ESRD patients are generally under the care of
a nephrologist, who is typically supported by a team of dialysis professionals,
including:

Patient Care Personnel. Patient care personnel include registered nurses
and patient care technicians who work under the supervision of registered
nurses. Patient care personnel administer the dialysis treatment in accordance
with the nephrologist's prescriptions. Nurses also assess the patient's
condition throughout treatment, administer all medication, provide psycho-social
assessments, and educate patients regarding their treatment.

Dieticians. Dialysis patients in general, and hemodialysis patients in
particular, must follow a restricted diet. The effectiveness and the efficiency
of each patient's dialysis treatment is influenced by

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the patient's compliance with these dietary restrictions. In addition, many
dialysis patients receive a complex regimen of nutritional supplements to
augment their diet. Dialysis facilities generally employ dieticians who are
responsible for designing a patient's diet, educating and training the patient
about the importance of the diet, and continually monitoring the patient's
nutritional status and compliance with dietary guidelines.

Social Workers. Federal regulations require that a social worker, having a
masters degree in social work and a background in clinical practice, provide
assessment and counseling to ESRD patients and their families. Social workers
are also required to assist ESRD patients in obtaining transportation to and
from the dialysis facility, financial support services from government and
private sources when needed, insurance and dialysis services when traveling away
from home.

BUSINESS STRATEGY

The Company's goal is to continue expanding its geographic coverage and
market penetration while maintaining high quality patient care and physician
satisfaction with its services. Renex intends to enter new markets primarily
through acquisitions and to penetrate existing markets primarily through de novo
development, same facility growth and the establishment of alliances with
hospitals and managed care organizations. The key elements of the Company's
strategy include the following:

CREATE AND EXPAND REGIONAL NETWORKS

The Company's growth strategy is focused on establishing local clusters of
dialysis facilities in order to create strong regional networks. Renex has
targeted seven markets, in which the Company currently has operations, for the
development of regional networks. The Company intends to continue to grow these
regional networks through a combination of strategic acquisitions and de novo
development. Additionally, Renex intends to enter new markets, primarily through
acquisitions, where it believes it can establish significant market share over
time.

ACQUISITIONS. While the dialysis industry is undergoing significant
patient and facility growth, it is also undergoing consolidation in the number
of providers. The Company believes that many physician-owners are selling their
facilities to gain relief from the administrative burdens associated with
changing government regulations and changing patterns of reimbursement, to focus
their efforts on patient care and to realize a more immediate return on their
investment. In addition, increasing pressures within the hospital industry,
which is also undergoing consolidation, are motivating hospitals to sell or
outsource the management of their dialysis facilities as they re-focus on their
core businesses. Renex seeks to capitalize on these trends by acquiring both
physician-owned and hospital-based outpatient dialysis facilities.

The Company evaluates potential acquisitions on the basis of historical and
projected patient volumes and profitability, the state of the local competitive
environment, the nephrologist's reputation for quality and the willingness of
the physician-owner to remain actively involved as medical director. The Company
intends to focus primarily on acquisitions of facilities with 70 or more
patients owned by mid-career nephrologists who intend to continue to build their
nephrology practices. The purchase price is based on projected earnings of the
acquired facility under the Company's management and the consideration will
generally be paid in a combination of cash and stock. Renex believes that this
combination meets the nephrologists' immediate cash needs and offers the
nephrologists a possible greater overall long-term return through the potential
appreciation in the value of the stock.

DE NOVO DEVELOPMENT. Since inception, the Company has grown primarily
through an aggressive de novo development strategy. This strategy has led to the
development of eight dialysis facilities in five markets. The Company intends to
continue using this strategy primarily in its existing markets, where its
reputation attracts additional referring nephrologists.

In establishing de novo facilities, the Company first seeks to attract one
or more nephrologists whose existing patient base and projected growth supports
the establishment of a new facility. The

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31

Company will not develop a facility unless it has a written agreement with a
local nephrologist to serve as medical director for a minimum of five years.
Because one or a few nephrologists account for all or a significant portion of a
facility's patients, the Company's selection of a specific site is determined,
in part, by the location of the physician selected as the facility's medical
director. The Company also analyzes patient density and locations of competing
facilities by postal zip code to identify the best location to service the
medical director's patients and to attract additional patients who may be
traveling longer distances to receive treatment at competitors' facilities. Once
an appropriate site has been obtained, the Company employs its knowledge and
experience to design and build a new facility within a few months.

SAME-FACILITY GROWTH. The Company seeks to achieve same-facility growth in
excess of the growth rate of the ESRD patient population by marketing its
services to additional community and hospital-based nephrologists. Marketing
emphasis is placed on the quality of services provided, convenience of locations
and commitment to meeting the professional needs of nephrologists. In order to
facilitate the transfer to, and enrollment and care of, patients at its
facilities, the Company continually strives to simplify its processes for
admitting new patients, monitoring patient progress and updating patient
treatment orders. The Company also attracts patients through patient-to-patient
referrals, local print and other advertising and open house events. The
Company's attention to facility design, equipment selection and patient
amenities, such as individual television sets at each patient treatment station,
VCR equipment for patient education and entertainment and portable telephones,
are important factors in retaining patients and fostering patient-to-patient
referrals.

ESTABLISH ALLIANCES WITH HOSPITALS AND MANAGED CARE ORGANIZATIONS

Although the vast majority of ESRD patients receive dialysis on an
outpatient basis, hemodialysis is also performed by hospitals on an inpatient
basis, generally in an acute care setting. The Company's strategy is to leverage
its relationships with nephrologists to identify hospitals which are: (i)
seeking to outsource their existing dialysis programs; (ii) interested in
establishing inpatient dialysis programs; or (iii) dissatisfied with their
current dialysis contractors. The Company's facility administrators are
responsible for marketing to local hospitals on the basis of quality, service
and price. The Company has two hospital contracts in Mississippi and, in 1996,
established two new hospital inpatient programs, one each in Massachusetts and
Pennsylvania. The Company recently signed a contract to establish a new
inpatient dialysis program in a community hospital in New Jersey, subject to the
hospital's receipt of regulatory approval.

Renex believes that managed care programs will have an increasing influence
on the ESRD market. The Company is committed to establishing managed care
relationships through non-exclusive and semi-exclusive managed care contracts in
its markets. The Company believes that its strategy of clustering facilities,
and thus providing multiple sites to serve managed care patients, will enhance
the Company's ability to compete for managed care contracts. The Company's
facility administrators are responsible for identifying and negotiating managed
care contracts. The Company currently has non-exclusive managed care contracts
in most of its markets.

CAPITALIZE ON RELATIONSHIPS WITH NEPHROLOGISTS

Renex believes that its success is attributable to the Company's efforts to
identify and cultivate relationships with those nephrologists who have a rapidly
expanding patient base and who are seeking an association with a company known
for high quality patient care and sensitivity to physicians' professional
concerns. Since inception, Renex has managed its business based on a set of
guiding principles that recognize nephrologists as the Company's primary
customer and high quality patient care as the nephrologist's primary concern.
These principles include: (i) involving the nephrologist in all aspects of
designing, equipping, staffing and planning the clinical operating policies and
procedures of a Renex facility; (ii) avoiding corporate interference in the
nephrologist's medical decisions; (iii) treating the nephrologist's patients
with dignity and respect; (iv) assessing and responding to the nutritional,
psychological and social needs of patients; (v) creating an environment which
fosters

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patient wellness and safety; and (vi) developing long-term care plans with an
emphasis on returning the nephrologist's patients to the community at the
patient's highest level of independent living.

Renex believes that its guiding principles appeal to nephrologists and help
facilitate their recruitment as medical directors. The Company has developed
marketing materials based on these principles and actively markets to
nephrologists through journal advertising, direct mail and personal networking,
including third-party introductions by the Company's existing medical directors.

OPERATIONS

OUTPATIENT FACILITIES

As of August 31, 1997, the Company operated twelve outpatient dialysis
facilities, with a total of 187 certified dialysis stations. All of the
facilities are operated through wholly-owned subsidiaries and are located in
leased premises. The following table sets forth selected information regarding
the Company's dialysis facilities:

NUMBER OF TREATMENTS(1)
--------------------------------------------
SIX MONTHS
DATE OF CURRENT YEARS ENDED DECEMBER 31, ENDED
OPENING/ NUMBER OF -------------------------- JUNE 30,
LOCATION OF FACILITY ACQUISITION STATIONS 1994 1995 1996 1997
- -------------------------- ------------- --------- ------ ------ ------ --------------

University City, MO March 1994 21 7,252 14,462 17,251 9,807
Pittsburgh, PA May 1994 20 1,357 4,673 6,941 4,557
Tampa, FL August 1994 14 1,481 6,455 8,730 4,248
Creve Coeur, MO November 1994 17 170 4,058 7,342 4,231
Amesbury, MA May 1995 16 -- 2,692 7,473 5,328
Philadelphia, PA August 1995 17 -- 741 6,217 4,013
Bridgeton, MO August 1995 13 -- 621 5,652 3,760
Jackson, MS(2) December 1995 18 -- -- 6,864 3,755
Delta, LA(2) December 1995 9 -- -- 8,008 3,599
Port Gibson, MS(2) December 1995 8 -- -- 2,719 1,608
Orange, NJ(2) November 1996 20 -- -- 593 5,685
Woodbury, NJ December 1996 14 -- -- 129 2,373
--- ------ ------ ------ ------
TOTAL 187 10,260 33,702 77,919 52,964
=== ====== ====== ====== ======

- ---------------

(1) Treatments listed opposite a facility include all outpatient hemodialysis
treatments, home hemodialysis treatments, acute care treatments provided at
hospitals located near such facilities and peritoneal dialysis treatments.
Peritoneal dialysis treatments are stated in hemodialysis equivalents.
Excludes treatments provided by a facility sold by the Company in September
1996.
(2) Facilities acquired by the Company. Only treatments rendered after
acquisition of the facility are included in the table.

The Company has four additional facilities under development located in
North Andover, Massachusetts; Union, Missouri; Maplewood, Missouri; and
Bloomfield, New Jersey. Construction of leasehold improvements for the North
Andover facility is near completion and is scheduled to open in October 1997.
The building in which the Union facility will be located is under construction,
with leasehold improvements scheduled to be constructed during the fourth
quarter of 1997, and the Maplewood and Bloomfield facilities are in the
pre-construction phase with architectural drawings for the locations being
completed. The Maplewood facility is scheduled to open in December 1997, and the
Union and Bloomfield facilities are scheduled to open during the first quarter
of 1998. The Company estimates that it will require cash outlays of $1.8 million
for the construction of leasehold improvements and expects to use $1.6 million
from the proceeds of this Offering and the remainder from its Line of Credit.
The Company expects to finance approximately $1.2 million in equipment for these
facilities through its Lease Line. See "Use of Proceeds", "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

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OPERATION OF FACILITIES

The Company's dialysis facilities are designed specifically for outpatient
hemodialysis and for the training of peritoneal dialysis and home hemodialysis
patients. Each facility has between eight and 21 dialysis stations and many
facilities are designed to accommodate additional stations as patient census
increases. In addition, each facility generally contains a reception room, a
patient preparation area, a nurse's station, a patient examination room, a
patient training room, a water treatment room, a dialyzer reprocessing room,
staff work areas, offices, a kitchen, a supply room, and a lounge. All of the
Company's facilities contain state-of-the-art equipment and modern
accommodations and are typically located near public transportation. The
facilities are designed to provide a pleasant and comfortable environment for
each patient and include such amenities as color television sets for each
patient station, VCRs for patient education and entertainment, and portable
telephones.

Each facility is managed by a full time professional administrator with
experience in the dialysis industry. Each administrator is supported by a
director of nursing, nursing professionals, social workers, dieticians,
technicians and clerical support staff. In accordance with Medicare regulations,
each facility is supervised by a practicing physician, typically a nephrologist,
who serves as medical director. The medical director is responsible for
implementing the Company's policies and procedures to assure high quality
patient care. The medical director's responsibilities also include patient
education, recommendation of appropriate equipment, development of staff
training programs and community relations.

The Company also offers peritoneal dialysis, both CAPD and CCPD, at all of
its facilities. Such services consist of patient training, the provision of
equipment and supplies, patient monitoring and follow-up assistance to patients
who prefer and are able to receive this form of dialysis. Patients and their
families or other caregivers are trained over a two week period by a registered
nurse to perform peritoneal dialysis.

STAFF-ASSISTED HOME HEMODIALYSIS SERVICES

In addition to the Company's outpatient dialysis facilities, the Company
provides staff-assisted home hemodialysis services in St. Louis, Missouri and
Tampa, Florida. In these programs, the Company provides dialysis equipment,
supplies and a fully qualified nurse or technician who administers the
hemodialysis treatments in the patient's home three times per week on a schedule
convenient to the patient.

INPATIENT DIALYSIS SERVICES

The Company provides inpatient dialysis services to five hospitals pursuant
to contracts negotiated with the hospitals for per-treatment rates paid directly
by the hospitals. The Company also has one additional contract with a hospital
to provide acute dialysis services once the hospital receives state approval for
the program. In most instances, the Company provides the dialysis equipment and
supplies to the hospital and administers the dialysis treatment when requested.
Examples of cases in which inpatient services are required include patients with
acute kidney failure resulting from trauma or other causes, newly diagnosed but
clinically unstable ESRD patients and ESRD patients who require hospitalization.

ANCILLARY SERVICES

The Company provides a full range of ancillary services to ESRD patients,
the most prominent of which is the physician prescribed administration of
bioengineered erythropoietin ("EPO"). EPO is a substitute for the natural
protein, erythropoietin, which is secreted by the kidneys and stimulates the
production and development of red blood cells. Low levels of erythropoietin in a
patient's blood often result in anemia. EPO is useful in the treatment of anemia
associated with ESRD and reduces the need for blood transfusions. Substantially
all ESRD patients receive EPO in dosages varying with a patient's weight and
blood count. Overall, the Company derived approximately one-third of its net
revenues for

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the year ended December 31, 1996 from the provision of ancillary services. The
majority of such net revenues were from the administration of EPO. EPO is
produced by only one manufacturer. Although the Company has not experienced any
difficulty in obtaining supplies of EPO, there can be no assurance that the
Company will be able to obtain sufficient supplies at reasonable prices, or at
all. See "Risk Factors -- Dependence on Sole Supplier for EPO."

Other ancillary services that the Company provides to its ESRD patients
include electrocardiograms, bone densitometry studies, nerve conduction studies,
chest x-rays, blood transfusions and the administration of pharmaceutical
products specific to ESRD, such as iron dextran (an intravenous iron
supplement), calcitriol (an intravenous calcium supplement) and intradialytic
parenteral nutrition ("IDPN"). Effective July 1, 1997, routine coverage by
Medicare for electrocardiograms, bone densitometry studies, nerve conduction
studies and chest x-rays was eliminated. Medicare continues to pay for these
tests only when there is documentation of medical necessity. These specific
ancillary services represented approximately 2% of the Company's net revenues
for each of the years ended December 31, 1994, 1995 and 1996 and for the six
months ended June 30, 1996 and 1997. The Company does not anticipate a
significant reduction in these net revenues as a result of the change requiring
medical necessity documentation. See "Risk Factors -- Dependence upon Government
Reimbursement."

MEDICAL DIRECTORS

Medicare regulations mandate that, in order to receive reimbursement under
the Medicare ESRD program, the dialysis facility must be "under the general
supervision of a Director who is a physician." Generally, the medical director
must be certified or board eligible in internal medicine, with at least twelve
months of training or experience in the care of ESRD patients at dialysis
facilities. Some facilities may also have associate medical directors.

Medical directors and associate medical directors enter into written
agreements with the Company which specify their duties and establish their
compensation. Compensation is fixed for periods of one year or more, is
separately negotiated for each facility, and generally depends upon competitive
factors in the local market and the medical director's professional
qualifications and responsibilities. Agreements between the Company and its
medical directors have a minimum term of five years and may extend for as much
as ten years. Under these agreements, the Company pays its medical directors a
base monthly compensation. Medical director agreements, to the extent permitted
by law, restrict the medical director from acting as a medical director, owner
or equity holder in competing dialysis facilities within a specific geographic
area, but do not prohibit the physician from providing direct patient care
services at other locations and do not require, or otherwise compensate the
physician for referrals of patients to the facility.

In connection with acquisitions, the Company generally requires
non-competition agreements from the sellers, whether physicians or otherwise.
Such non-competition agreements prohibit such sellers from owning, operating,
maintaining or otherwise participating in competing facilities within specific
geographic areas, and extend for periods of two to ten years. See "Risk
Factors -- Operations Subject to Extensive Government Regulation" and "Risk
Factors -- Dependence upon Physician Referrals."

QUALITY ASSURANCE

Renex has established a system-wide quality assurance process, which
includes its Continuous Quality Improvement ("CQI") program, to ensure that a
high standard of care is provided to all of the Company's patients. The CQI
program is modeled after the Joint Commission on Accreditation of Healthcare
Organization's ten step process. The CQI program is implemented at the facility
level by the medical director, clinic administrator and director of nursing.
This process involves the continuous collection and analysis of patient care
data to identify areas for improvement and to monitor progress of previously
implemented measures. Each facility regularly audits its quality of care and
equipment to ensure that all aspects of patient care meet the standards set by
the Company's corporate office. The Company manages the CQI program at the
corporate level through the compilation and analysis of all facilities'
statistical data. These data are used to compare the Company's overall
performance and each

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facility's specific performance to the national core indicators established for
the dialysis industry by HCFA and the regional ESRD networks. Results of these
comparisons are used to effect Company-wide improvements.

Additional quality assurance support is provided by the Company's corporate
office through a quality assurance department. The department develops, monitors
and audits the quality standards of each dialysis facility on an ongoing basis
through reporting mechanisms and site inspections to ensure the facilities meet
the regulations of HCFA and the Occupational Safety and Health Administration.

SOURCES OF REIMBURSEMENT

The following table provides information regarding the percentage of net
revenues received by the Company by source:

SIX MONTHS
YEARS ENDED ENDED
DECEMBER 31, JUNE 30,
----------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----

Medicare/Medicaid.................................... 65.0% 58.5% 67.2% 67.4% 76.2%
Private/Managed Care Payors.......................... 35.0 41.5 30.9 31.2 20.9
Hospital Inpatient Dialysis Services................. -- -- 1.9 1.4 2.9
----- ----- ----- ----- -----
Total....................................... 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====

The Company obtains a substantial portion of its reimbursement under a
prospective Medicare reimbursement system for dialysis services provided to ESRD
patients. The Social Security Act ("SSA") provides Medicare coverage for
individuals who are medically determined to have ESRD. ESRD is currently defined
in federal regulations as that stage of kidney impairment that appears
irreversible and permanent and requires a regular course of dialysis or kidney
transplantation to maintain life. Once an individual is medically determined to
have ESRD, the SSA specifies that one of two conditions must be met before
entitlement begins: (i) a regular course of dialysis must begin; or (ii) a
kidney transplant must be performed. The SSA provides that entitlement begins 90
days after the month in which a regular course of dialysis is initiated.

Under the Medicare ESRD program, reimbursement rates per treatment are
fixed in advance and have been adjusted from time to time by the U.S. Congress.
Payment for dialysis services is based on a prospective system which was
implemented by HCFA in 1972. Providers are paid a base reimbursement rate per
dialysis treatment (the "Composite Rate"). The Composite Rate constitutes
payment for all routinely provided supplies, drugs, tests and services incident
to dialysis. Other dialysis related ancillary services, including certain drugs
(such as EPO), blood transfusions and certain tests ordered by physicians, are
separately reimbursed in accordance with Medicare's reimbursement policies.
Although this form of reimbursement limits the allowable charge per treatment,
it provides the Company with predictable and recurring per treatment net
revenue. Medicare, through its carriers, pays 80% of the amounts set by the
Medicare prospective reimbursement system. The remaining 20% is paid by
Medicaid, secondary private insurance coverage, if any, and/or the patient.

From time to time, the U.S. Congress adjusts the applicable Composite Rate
and fees based upon a review of several factors, including provider cost data
from prior years. Prior to 1983, the average Composite Rate was established at
$138 per treatment. In 1983, the average Composite Rate was reduced to $127 per
treatment for free-standing outpatient dialysis facilities. In 1986, the average
Composite Rate was further reduced to $125 per treatment. In January 1991, the
average composite rate was increased to $126, the current level. The Composite
Rate varies from region to region based on regional wage variations.

The Composite Rate has been the subject of a number of reports and studies.
In April 1991, the Institute of Medicine, an organization chartered by the
National Academy of Sciences and an advisor to the federal government, released
a report recommending that the Composite Rate be adjusted for the effects of
inflation. In March 1996, after conducting a study on dialysis costs and
reimbursement at

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the request of the U.S. Congress, the Prospective Payment Assessment Commission
recommended a 2% increase be made in the Composite Rate. The U.S. Congress is
not required to implement either of these recommendations and can either raise
or lower the reimbursement rate. The Company is unable to predict what, if any,
future changes may occur in the Composite Rate. Any reductions in the Composite
Rate could have a material adverse effect on the Company's business, financial
condition and results of operations.

One ancillary item that provides the Company with significant net revenues
is the provision of EPO. In June 1989, Medicare started reimbursement for EPO
treatments at the rate of $40 per treatment up to 10,000 units and $70 for
treatments in excess of 10,000 units. In January 1991, Medicare reimbursement
rates were changed to $11 per 1,000 units with no maximum and later reduced to
$10 per 1,000 units in 1993. Currently, the administration of EPO is reimbursed
only for patients whose average hematocrit levels over a 90 day period are 36%
or less, which include the vast majority of dialysis patients. Hematocrit is the
measurement of the concentration of oxygen-carrying red blood cells in a
patient's bloodstream. The EPO Medicare reimbursement rate may be adjusted
annually to reflect cost of living changes.

In its Fiscal Year 1997 Work Plan, the Office of Inspector General ("OIG")
of the Department of Health and Human Services ("HHS") stated that it may
recommend cuts in reimbursement rates for EPO because preliminary results of its
study of EPO indicated that dialysis facilities' purchase price of EPO is less
than the current reimbursement rate. The Company cannot predict future changes
in the reimbursement rate for the administration of EPO, the future
reimbursement dosage limit per administration, or the cost of the drug. Any
reductions in reimbursement, dosage limitations, or increases in the cost of the
drug could have a material adverse effect on the Company's business, financial
condition and results of operations.

In March 1996, HCFA published a request for proposals ("RFP"), requesting
bids from managed care companies to participate in a three year test program for
the comprehensive treatment of ESRD patients, including dialysis, kidney
transplantation, physician and hospital services. Currently, managed care
companies are only permitted to arrange for the treatment of existing members of
their programs who develop ESRD subsequent to their enrollment in the managed
care plan. HCFA selected four managed care companies that will be allowed to
recruit ESRD patients beginning in mid-1997 in a test program. One managed care
company subsequently withdrew from the test program and will not be replaced.
The results of the test program will determine whether HCFA will open up the
market to additional managed care companies. The RFP includes a proposed
capitation payment scale for ESRD patients. HCFA will also require that the
managed care companies offer certain extra services including rehabilitation
counseling, free transportation to physicians' offices and discounted
prescription drugs to all ESRD patients. The Company is unable to predict
whether the HCFA test program will be successful and result in large numbers of
ESRD patients enrolling in managed care programs, or the impact, if any, of such
enrollment on the Company's operations. The widespread introduction of managed
care to the dialysis industry could result in a change of the reimbursement
rates for the Company's services, which could have a material effect on the
Company's business, financial condition and results of operations.

MEDICARE ELIGIBILITY. Medicare laws provide that any individual,
regardless of age, who has no primary insurance coverage from a private
insurance company and is diagnosed as having ESRD is automatically covered under
Medicare if he or she is Medicare eligible and applies for coverage. Coverage
varies depending upon the age of the patient and the status of other insurance
coverage. For ESRD patients over age 65, who are not covered by an employer
group health insurance plan, Medicare coverage commences immediately. For ESRD
patients over age 65 who are covered by an employer group health plan, Medicare
coverage begins after an 18 month coordination of benefits period.

For ESRD patients under age 65 who are not covered by an employer group
health insurance plan, Medicare coverage begins 90 days following the month in
which the patient begins dialysis. During the first 90 days, Medicaid (if the
patient is eligible), private insurance, or the patient is responsible for

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payment for dialysis services. If an ESRD patient who is not covered by an
employer group health plan begins home dialysis training during the first 90
days of dialysis, Medicare immediately becomes the primary payor.

Effective August 5, 1997, as part of the Balanced Budget Act of 1997, ESRD
patients under age 65 who are covered by an employer group health insurance plan
must wait 33 months (consisting of the three months' entitlement waiting period
described above and an additional 30 months coordination of benefits period)
before Medicare becomes the primary payor. During the 33 month period, the
employer group health plan is responsible for paying primary benefits at its
negotiated rate or, in the absence of such a rate, at the Company's usual and
customary charges. Medicare generally pays the difference between what is paid
by the employer group health plan and the gross amount payable by Medicare.
Following such 33 month period, Medicare becomes the primary coverage and the
group insurance becomes secondary. If an ESRD patient who is covered by an
employer group health plan elects home dialysis training during the first 90
days of dialysis, Medicare becomes the primary payor after 30 months.

MEDICAID REIMBURSEMENT. Medicaid programs are state administered programs
partially funded by the federal government. These programs are intended to
provide coverage for patients whose income and assets fall below state defined
levels and who are otherwise uninsured. In certain states, Medicaid serves as
the primary payor for patients who are not eligible for Medicare benefits. The
programs also serve as supplemental insurance programs for the Medicare
co-insurance portion and provide coverage for certain services that are not
covered by Medicare. State regulations generally follow Medicare reimbursement
levels and coverages without any co-insurance amounts. Certain states, however,
require beneficiaries to pay a monthly share of the cost based upon levels of
income or assets. The Company is a licensed ESRD Medicaid provider in all states
in which it does business.

PRIVATE PAYOR REIMBURSEMENT/ACUTE CARE CONTRACTS. The Company receives
reimbursement from private payors for ESRD treatments and ancillary services
prior to Medicare becoming the primary payor, at rates which can be
significantly higher than the per treatment rate set by Medicare. After Medicare
becomes a patient's primary payor, private payors become secondary payors and
generally reimburse the Company for the 20% of the Medicare allowable rate not
paid by Medicare. The Company has also negotiated non-exclusive managed care
contracts in certain markets with certain payors at rates which range from the
Medicare composite rate to significantly higher amounts. The Company also
receives payments for the provision of dialysis services from several hospitals
under acute care contracts at rates significantly higher than the Medicare
composite rate.

GOVERNMENT REGULATION

GENERAL

The Company's operations are subject to extensive government regulation at
the federal, state and local levels. These government regulations require, among
other things, that the Company meet various standards governing the construction
and management of facilities, personnel, maintenance of proper records,
equipment and quality assurance programs. In order to receive Medicare
reimbursement, dialysis facilities must be certified by HCFA and are subject to
periodic inspection to assure compliance with applicable regulations. HCFA's
approval is also required for the addition of dialysis stations at existing
facilities. All of the Company's facilities are certified by HCFA.

All states have specific regulations governing dialysis services. These
regulations vary from state to state and many include approval of owners and
construction plans, licensure of facilities, inspections or certificates of need
("CON"). Except for its facilities located in Mississippi and Missouri, the
Company does not presently operate in any state which has an applicable CON law.
However, the Company may in the future acquire or develop facilities in such
states. In such event, the Company would apply for approval through the
applicable CON process and comply with all applicable licensing requirements.

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Any loss by the Company of its federal certifications, its authorization to
participate in the Medicare or Medicaid programs or its licenses under the laws
of any state or other governmental authority from which a substantial portion of
its net revenues is derived or a change resulting from health care reform
reducing dialysis reimbursement or reducing or eliminating coverage for dialysis
services would have a material adverse effect on the Company's business,
financial condition and results of operations. The Company believes that the
health care services industry will continue to be subject to intense regulation
at the federal, state and local levels, the scope and effect of which cannot be
predicted. No assurance can be given that the activities of the Company will not
be reviewed and challenged by government regulators or that health care reform
or budget initiatives will not result in a material adverse change to the
Company.

FRAUD AND ABUSE

ANTI-KICKBACK STATUTE. The Company's operations are subject to the illegal
remuneration provisions of the federal SSA governing federally funded health
care programs, including Medicare and Medicaid, and similar state laws that
impose criminal penalties and civil sanctions on persons who knowingly and
willfully solicit, offer, receive or pay any remuneration, whether directly or
indirectly, in return for, or to induce, the referral of a patient for
treatment, or, among other things, the ordering, purchasing, or leasing of items
or services that may be paid for in whole or in part by Medicare, Medicaid or
similar state programs. Violations of the federal anti-kickback statute are
punishable by criminal penalties, including imprisonment, fines, freezing of
assets, asset forfeiture and exclusion of the provider from future participation
in the Medicare or Medicaid programs. Civil penalties for violations of the
federal anti-kickback statute include assessments of $10,000 per improper claim
for payment, plus three times the amount of such claim and suspension from
future participation in the Medicare or Medicaid programs. Civil suspension from
participation in Medicare or Medicaid for anti-kickback violations also can be
imposed through an administrative process, without the imposition of civil
monetary penalties. Some state statutes also include criminal penalties.

To provide guidance regarding the federal anti-kickback statute, the OIG
has published regulations that create exceptions or "safe harbors" for certain
business transactions. The safe harbors are narrowly drafted and many lawful
transactions fall outside their scope. Transactions that satisfy the criteria
under applicable safe harbors will be deemed not to violate the federal
anti-kickback statute. Transactions that do not satisfy all elements of a
relevant safe harbor do not necessarily violate the statute, although such
transactions may be subject to scrutiny by enforcement agencies.

Since the federal anti-kickback statute has been broadly interpreted by the
government and through court decisions, it could limit the manner in which the
Company conducts its business. The Company seeks to structure its various
business arrangements, including its relationship with physicians, to comply
with the federal provisions. However, there can be no assurance that the
Company's arrangements with physicians and other business arrangements comply in
all material respects with the federal anti-kickback statute and all other
applicable related laws and regulations. Because of the broad provisions of the
federal anti-kickback statute the OIG or other governmental agency may require
the Company to change its practices or experience a material adverse effect on
its business, financial condition and results of operations.

LEASES WITH PHYSICIANS. Certain of the Company's dialysis facilities are
leased from entities in which physicians who refer patients to the Company hold
interests. Because of the referral of patients by these physicians, the federal
anti-kickback statute may apply. HHS has promulgated a safe harbor relevant to
such arrangements relating to space rental. However, there can be no assurance
that the Company's leases satisfy the space rental safe harbor.

MEDICAL DIRECTOR RELATIONSHIPS. Because the Company's medical directors
refer patients to the Company's facilities, the federal anti-kickback statute
could apply to such referrals. The Company seeks to comply with the requirements
of the federal anti-kickback statute, or if applicable, the personal services or
employment safe harbor provisions, when entering into agreements or contracts

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with its medical directors and other physicians. However, there can be no
assurance that the Company's contractual arrangements with its medical directors
are in compliance with the federal anti-kickback statute.

ACUTE DIALYSIS SERVICES. Under the Company's acute inpatient dialysis
service arrangements, the Company agrees to provide a hospital with supervised
emergency or acute dialysis services, including qualified nursing, technical
personnel and services, and, in most cases, equipment. Because physicians under
contract with the Company may refer patients to hospitals with which the Company
has an acute dialysis service arrangement, the federal anti-kickback statute
could apply. There can be no assurance that the Company's contractual
arrangements with hospitals for acute inpatient dialysis services are in
compliance with the federal anti-kickback statute.

CERTAIN RELATIONSHIPS WITH LABORATORIES AND IDPN SUPPLIERS. The Company
enters into arrangements with laboratories for purposes of obtaining laboratory
services. Such services include testing currently reimbursed under the Composite
Rate, as well as testing reimbursed separately from the Composite Rate. In
October 1994, the OIG published a Special Fraud Alert which stated that the
federal anti-kickback statute could be violated when a dialysis facility obtains
discounts from a laboratory for testing encompassed within the Composite Rate in
return for referring all or most of the dialysis facility's non-composite rate
testing to the laboratory. In addition, the Company has arrangements with
suppliers of IDPN. In May 1993, the OIG issued a report indicating its belief
that many ESRD patients receive IDPN although they do not meet Medicare coverage
guidelines for the treatment. Furthermore, in July 1993, the OIG issued a
Management Advisory Report indicating that "administration fees" paid by IDPN
suppliers to dialysis facilities for administering IDPN to patients during
dialysis could violate the federal anti-kickback statute when the payments made
to the dialysis facilities are unreasonably high.

There can be no assurance that the Company's current arrangements with
laboratories, IDPN suppliers, and other persons or entities who either refer
patients to the Company or from whom the Company purchases items or services are
in material compliance with the federal anti-kickback statute or that the
Company's future arrangements will not be challenged, required to be changed, or
result in sanctions. Furthermore, there can be no assurance that the Company
will not be challenged or subject to sanctions for any of its past arrangements.
Any such challenge or change, including any related sanctions which might be
assessed, could have a material adverse effect on the Company's business,
financial condition and results of operations.

STARK LAW. Stark II restricts physician referrals for certain "designated
health services" to entities with which a physician or an immediate family
member has a "financial relationship." The entity is prohibited from claiming
payment under the Medicare or Medicaid programs for services rendered pursuant
to a prohibited referral and is liable for the refund of amounts received
pursuant to prohibited claims. The entity also can incur civil penalties of up
to $15,000 per improper claim and can be excluded from participation in the
Medicare or Medicaid programs. Stark II provisions became effective on January
1, 1995. Comparable provisions applicable to clinical laboratory services
("Stark I") became effective in 1992.

A "financial relationship" under the Stark provisions is defined as an
ownership or investment interest in, or a compensation arrangement between, the
physician (or an immediate family member) and the entity. The Company has
entered into compensation agreements with its medical directors or their
respective professional associations, and in one case a medical director is a
general partner of a partnership which leases real property to the Company.
Certain medical directors also own shares of the Company's Common Stock, and/or
options to purchase shares of Common Stock. Accordingly, such medical directors
have a "financial relationship" with the Company which may be applicable to the
Stark provisions.

For purposes of Stark II, "designated health services" include, among other
things: clinical laboratory services; parenteral and enteral nutrients,
equipment and supplies, including IDPN; prosthetics, orthotics and prosthetic
devices and supplies; physical and occupational therapy services; outpatient

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prescription drugs; durable medical equipment, and inpatient and outpatient
hospital services. Kidney dialysis is not a designated health service under
Stark II. However, the Stark definition of "designated health services" includes
items and services that are components of dialysis or that may be provided to a
patient in connection with dialysis, if such items and services were considered
separately rather than collectively as dialysis. The Stark I regulations provide
an exception for certain clinical laboratory services reimbursed under the
Medicare composite rate for dialysis. Because HHS has not yet issued regulations
under Stark II, it is unclear whether ancillary services administered in
conjunction with dialysis treatments, but which are not included in the
Composite Rate, such as EPO, non-routine parenteral items and non-routine
laboratory services, constitute separate services or are considered part of the
dialysis treatment. If such services are considered separate services, Stark II
would apply.

Stark II contains exceptions for ownership or compensation arrangements
that meet certain specific criteria set forth in the statute or in forthcoming
regulations. With respect to ownership, certain qualifying in-office physician
or ancillary services provided by or under the supervision of physicians in a
single group practice are exempt from both ownership and compensation
arrangement restrictions. With respect to compensation arrangements, exceptions
are available for certain qualifying arrangements in the following areas: (i)
bona fide employment relationships; (ii) personal services contracts; (iii)
space and equipment leasing arrangements; (iv) certain group practice
arrangements with a hospital that were in existence prior to December 1989; and
(v) purchases by physicians of laboratory services, or of other items and
services at fair market value. In order to be exempt from the Stark II
self-referral prohibition, it is necessary to meet all of the criteria of a
particular exception for each financial relationship existing between an entity
and a referring physician. Although the Company does not believe Stark II
applies to its operations, the Company believes that several of its financial
relationships with referring physicians meet the criteria for an exception. For
example, the Company believes, based on the language of Stark II, that its
agreements with its medical directors or their professional associations satisfy
the exceptions for compensation pursuant to employment relationships, personal
services contracts or space leasing arrangements.

With respect to physician ownership/investments in the Company, Stark II
includes an exception for a physician's ownership or investment interest in
securities listed on an exchange or quoted on the Nasdaq Stock Market which, in
either case, meet certain criteria. Such criteria include a requirement that the
issuer of such securities have at least $75 million in stockholder equity at the
end of the issuer's most recent fiscal year or on average during the previous
three fiscal years. The Company is not currently eligible to rely on this
exception and will not be eligible following this Offering. Therefore, if the
regulations interpreting Stark II are issued, and in the event that ancillary
services provided by the Company in conjunction with dialysis treatments are
determined to be designated health services, then either the physicians who have
an ownership interest in the Company will have to divest such ownership, the
Company will have to meet the above described ownership exception or the
physicians will have to cease referrals to the Company. There can be no
assurance that if Stark II is interpreted to apply to the Company's operations,
the Company will be able to bring its financial relationships with referring
physicians into compliance with the provisions of Stark II, including relevant
exceptions. If the Company cannot achieve such compliance and Stark II is
broadly interpreted by HCFA to apply to the Company, such application of Stark
II could have a material adverse effect on the Company's business, financial
condition and results of operations. Furthermore, there can be no assurance that
the Company will not be challenged or subjected to sanctions for any of its past
arrangements, including repayment of amounts made pursuant to a prohibited
referral. Any such challenge, including any related sanctions which might be
assessed, may cause a change in the Company's operations and could have a
material adverse effect on the Company's business, financial condition and
results of operations.

Because physicians under contract with the Company may refer patients to
hospitals with which the Company has an acute inpatient dialysis service
arrangement, Stark II may be interpreted by the federal government to apply to
the Company's acute dialysis arrangements with hospitals. However, Stark II
contains exceptions for certain equipment rental and personal services
arrangements. There

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can be no assurance that the Company's contractual arrangements with hospitals
for acute inpatient dialysis services are in compliance with the requirements of
such exceptions to Stark II.

STATE REFERRAL REGULATIONS. Several states have enacted statutes
prohibiting physicians from holding financial interests in various types of
medical facilities to which they refer patients. The Company believes, based on
its understanding of such state laws, that its arrangements with physicians are
in material compliance with such laws. However, given the recent enactment of
such state laws, there is an absence of definitive interpretative guidance in
many areas and there can be no assurance that one or more of the practices of
the Company might not be subject to challenge under such state laws. If one or
more of such state laws are interpreted to apply to the Company and the Company
is determined to be liable for violations of such state laws, the application of
such state laws could have a material adverse effect on the Company's business,
financial condition and results of operations.

THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 AND THE
BALANCED BUDGET ACT OF 1997. In August 1996, President Clinton signed the
Health Insurance Portability and Accountability Act ("HIPAA") which requires,
among other things, that the Secretary of HHS issue advisory opinions regarding
what constitutes a violation under the federal anti-kickback statute and whether
an arrangement satisfies a statutory exception or regulatory safe harbor to the
federal anti-kickback statute. Prior to HIPAA's enactment, advisory opinions
regarding the federal anti-kickback statute could not be obtained from the OIG.
The OIG recently issued regulations regarding the procedures for obtaining
advisory opinions. The Company has not sought any advisory opinions from the OIG
to date.

The recently enacted Balanced Budget Act of 1997 also includes numerous
health fraud provisions, including: (i) new exclusion authority for the transfer
of ownership or control interest in an entity to an immediately family or
household member in anticipation of, or following, a conviction, assessment, or
exclusion; (ii) increased mandatory exclusion periods for multiple health fraud
convictions, including permanent exclusion for those convicted of three health
care-related crimes; (iii) authority for the Secretary of HHS to refuse to enter
into Medicare agreements with convicted felons; (iv) new civil money penalties
for contracting with an excluded provider or violating the Medicare and Medicaid
anti-kickback statute; (v) new surety bond and information disclosure
requirements for certain providers and suppliers; and (vi) an expansion of the
mandatory and permissive exclusions added by HIPAA to any federal health care
program (other than the Federal Employees Health Benefits Program).

FALSE CLAIMS. The Company is also subject to federal and state laws
prohibiting an individual or entity from knowingly and willfully presenting
claims for payment by Medicare, Medicaid or other third party payors that
contain false or fraudulent information. These laws provide for both criminal
and civil penalties. Furthermore, providers found to have submitted claims which
they knew or should have known were false, fraudulent, or for items or services
that were not provided as claimed, may be excluded from Medicare and Medicaid
participation, required to repay previously collected amounts, and/or subject to
substantial civil monetary penalties. In addition, the OIG has taken the
position that violations of the anti-kickback statute and the Stark law
constitute false claims. Although dialysis facilities are generally reimbursed
by Medicare based upon prospectively determined composite rates, the submission
of Medicare cost reports and other requests for payment by dialysis facilities
are covered by these laws. The Company believes that it has procedures to ensure
the accurate completion of cost reports and other requests for payment. However,
there can be no assurance that cost reports or other requests for payment filed
by the Company's dialysis facilities will be materially accurate or will not be
subject to challenge under these laws. Such challenge, if successful, could have
a material adverse effect on the Company's business, financial condition and
results of operations.

HEALTH CARE LEGISLATION. Because the Medicare program represents a
substantial portion of the federal budget, Congress takes action in almost every
legislative session to modify the Medicare program for the purpose of reducing
the amounts otherwise payable by the program to health care providers in order
to achieve deficit reduction targets, or to establish new quality standards,
among other reasons. In that regard, the Conference Report to the Balanced
Budget Act of 1997 requires the

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Secretary of HHS to audit cost reports for each renal dialysis provider at least
once every three years, beginning with costs reports for 1996, and requires the
Secretary to develop, not later than January 1, 1999, a method to measure and
report quality of Medicare renal dialysis services. The method must be
implemented by January 1, 2000. Legislation or regulations may be enacted in the
future that may significantly modify the Medicare ESRD program or substantially
reduce the amount paid for the Company's services. Furthermore, statutes or
regulations may be enacted which impose additional requirements on the Company
to maintain eligibility to participate in the federal and state payment
programs. Such new legislation or regulations may have a material adverse effect
on the Company's business, financial condition and results of operations.

OTHER REGULATIONS. The Company's operations are subject to various state
medical waste disposal laws. Recently promulgated regulations under the
Occupational Safety and Health Act ("OSHA") attempt to limit occupational
exposure to blood and other potentially infectious materials. These regulations
apply to all industries in which employees could reasonably be expected to come
in contact with blood pathogens, including dialysis facilities. The regulations
require employers to provide Hepatitis B vaccinations and personal protective
equipment. Employers must establish policies and procedures for infection
control, hazardous waste disposal techniques and other matters to minimize risk
of contamination. Employers also have specific record maintenance requirements.
The Company believes it is in compliance with the OSHA regulations.

No assurance can be made that in the future the Company's business
arrangements, past or present, will not be the subject of an investigation or
prosecution by a federal or state governmental authority. The Company believes
that the health care services industry will continue to be subject to
substantial regulation at the federal and state levels, the scope and effect of
which cannot be predicted by the Company. Any loss by the Company of its various
federal certifications, its authorization to participate in the Medicare and
Medicaid programs or its licenses under the laws of any state or other
governmental authority from which a substantial portion of its net revenues is
derived would have a material adverse effect on the Company's business,
financial condition and results of operations. See "Risk Factors -- Operations
Subject to Extensive Government Regulation."

COMPETITION

The dialysis industry is fragmented and highly competitive, particularly
with respect to the acquisition of existing dialysis facilities. Competition for
qualified nephrologists to act as medical directors is also intense. According
to HCFA, as of December 31, 1995, there were in excess of 2,800 dialysis
facilities in the United States. According to industry estimates, as of May 31,
1997, 52% of all ESRD patients were treated by the six largest outpatient
dialysis providers. The largest multi-facility provider is Fresenius Medical
Care AG. Other large publicly owned dialysis companies include Gambro Health
Care Patient Services, Inc. (a subsidiary of Incentive AB), Renal Treatment
Centers, Inc., Total Renal Care, Inc. and Renal Care Group, Inc. An additional
multi-facility provider, Dialysis Clinics, Inc., is a not-for-profit entity.
Many of the Company's competitors have substantially greater financial resources
than the Company and may compete with the Company for acquisitions, development
and/or management of dialysis facilities. The Company may also experience
competition from facilities established by former medical directors or other
referring physicians. In addition, there are also a number of health care
providers that have substantially greater financial resources than the Company
who may decide to enter the dialysis industry. The Company believes that
competition for acquisitions increases the cost of acquiring dialysis facilities
and there can be no assurance that the Company will be able to compete
effectively with such competitors either for acquisitions or generally.

The Company believes that other important competitive factors in the
dialysis industry are the development of relationships with physicians, quality
of patient care and service and location and convenience of facilities.

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INSURANCE

The Company maintains property and general liability insurance,
professional liability insurance on its professional staff and other insurance
appropriate for its operations. The Company believes that its current levels of
such insurance are adequate in amounts and coverage. However, there can be no
assurance that any future claims will not exceed applicable insurance coverage.
Furthermore, no assurance can be given that malpractice and other liability
insurance will be available in the future at a reasonable cost, or that the
Company will be able to maintain adequate levels of malpractice insurance
coverage in the future. Each medical director and each other physician with
staff privileges at the Company's facilities is required to maintain his or her
own malpractice insurance for patient care activities at the facilities.

EMPLOYEES

As of June 30, 1997, the Company had 225 full-time and 33 part-time
employees in its dialysis operations and an additional 29 full-time and two
part-time employees in its corporate office. The Company's employees are not
represented by a labor union or covered by a collective bargaining agreement.
The Company considers its employee relations to be good.

PROPERTIES

The Company maintains its principal executive offices in Coral Gables,
Florida. The Company's facilities generally occupy between 4,000 and 10,000
square feet of leased space, with lease terms of five to ten years, typically
renewable for at least five years. The Company considers its properties to be in
good operating condition and suitable for the purposes for which they are being
used.

Expansion or relocation of the Company's dialysis facilities would be
subject to compliance with conditions relating to participation in the Medicare
ESRD program and certain states' health department requirements. In states that
require a CON, approval of an application submitted by the Company would be
necessary for expansion or development of a new dialysis facility. See
"Business -- Government Regulation."

LEGAL PROCEEDINGS

The Company is subject to claims and suits in the ordinary course of
business, including those arising from patient treatments, which the Company
believes are covered by insurance. The Company is not involved in any material
litigation and is not aware of any potential claims which would give rise to
material liability.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information with respect to the
executive officers and directors of the Company as of August 31, 1997:

NAME AGE POSITION
- ---------------------------------- --- -------------------------------------------------------

Milton J. Wallace(1).............. 61 Chairman of the Board
Arthur G. Shapiro, M.D.(1)........ 58 Vice Chairman of Board, Director of Medical Affairs
James P. Shea(1).................. 56 President, Chief Executive Officer, Director
Orestes L. Lugo................... 39 Vice President -- Finance, Chief Financial Officer
Patsy L. Anders................... 53 Vice President -- Business Development
Mignon B. Early................... 34 Vice President -- Operations
Jeffery C. Finch.................. 36 Vice President
Eugene P. Conese, Sr.(2).......... 67 Director
C. David Finch, M.D............... 38 Director
John E. Hunt, Sr.(2).............. 79 Director
Charles J. Simons(2)(3)........... 79 Director
Mark D. Wallace................... 29 Director, Secretary
Jeffrey H. Watson(3).............. 39 Director

- ---------------

(1) Member of the Executive Committee.
(2) Member of the Compensation and Stock Option Committee.
(3) Member of the Audit Committee.

MILTON J. WALLACE is a co-founder of the Company and has been Chairman of
the Board of the Company since its inception in July 1993. Mr. Wallace has been
a practicing attorney in Miami for over 30 years, and is currently a shareholder
in the law firm of Wallace, Bauman, Fodiman & Shannon, P.A. He was a co-founder
and a member of the Board of Directors of Home Intensive Care, Inc., a provider
of home infusion and dialysis services, serving as Chairman of its Executive
Committee from 1985 through July 1993 and Chairman of the Board from December
1989 until July 1993. Home Intensive Care, Inc. was acquired by W.R. Grace & Co.
in July 1993. Mr. Wallace is Chairman of the Board of Med/Waste, Inc., a
provider of medical waste management services. He is a director of several
private companies and is Chairman of the Dade County Florida, Housing Finance
Authority. From August 1987 through July 1989, Mr. Wallace was a director of
Centrust Savings Bank ("Centrust"), a federally insured savings and loan
institution which was placed under federal conservatorship in 1990. A lawsuit
was brought against the directors of Centrust by the Resolution Trust
Corporation (the "RTC"), alleging that the Centrust directors breached their
fiduciary duties. Mr. Wallace reached a settlement with the RTC in late 1995
without admitting any wrongdoing. Mr. Wallace is the father of Mark D. Wallace,
a Director of the Company.

ARTHUR G. SHAPIRO, M.D. is a co-founder of the Company and has been Vice
Chairman of the Company's Board and Director of Medical Affairs since the
Company's inception in July 1993. Dr. Shapiro has held an appointment to the
University of Miami School of Medicine as a professor of clinical obstetrics and
gynecology since January 1995. From 1985 until 1995, he was engaged in the
private practice of medicine. He is board certified in obstetrics and
gynecology, reproductive endocrinology and laser surgery. He is a Fellow in the
American College of Obstetrics and Gynecology and the American College of
Endocrinology. Dr. Shapiro was a co-founder of Home Intensive Care, Inc. and
served on its Board of Directors from 1985 until July 1993. Dr. Shapiro also
served as Home Intensive Care, Inc.'s Medical Director from 1990 until July
1993. He serves as Chairman of the Board of Bankers Savings Bank, Coral Gables,
Florida and as a Director of Med/Waste, Inc.

JAMES P. SHEA has been President and Chief Executive Officer of the Company
since August 1993 and a Director since December 1993. From July 1992 until June
1993, he served as Director General for

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45

Home Intensive Care, Inc.'s international division. From 1986 to 1990, he was
Senior Vice President of Protocare, Inc., an infusion therapy and respiratory
care provider, which he helped establish. From 1985 to 1986, he was General
Manager of the health care products division of The Norton Company, a
manufacturer of engineered materials. From 1983 to 1985, he was President of the
infusion division of National Medical Care, Inc., a kidney dialysis and infusion
therapy provider, which is now owned by Fresenius Medical Care AG.

ORESTES L. LUGO has served as the Company's Vice President -- Finance and
Chief Financial Officer since August 1995. From March 1994 until August 1995, he
was Chief Financial Officer of PacifiCare of Florida, a health maintenance
organization and subsidiary of PacifiCare Health Systems, Inc. From September
1993 until March 1994, he was Chief Financial Officer of Supreme International,
Inc., a clothing manufacturer. From July 1989 until September 1993, Mr. Lugo
served as Vice President of Finance for Home Intensive Care, Inc. From 1980 to
1989, Mr. Lugo was employed by the public accounting firm of Touche Ross, last
as a senior manager. Mr. Lugo is a Certified Public Accountant.

PATSY L. ANDERS has served as the Company's Vice President -- Business
Development since January 1996. From the Company's inception in July 1993
through January 1996, she served as the Company's Director of Business
Development. From 1990 until July 1993, Ms. Anders was the Physician Liaison for
Quality Care Dialysis Centers, Inc., the wholly-owned dialysis facility
subsidiary of Home Intensive Care, Inc. From 1986 through 1990, Ms. Anders was
Director of Physician Relations for Home Intensive Care, Inc. In 1989, Ms.
Anders founded Anders and Associates, a physician placement firm specializing in
the placement of nephrologists, and has served as its President since its
inception.

MIGNON B. EARLY, RN, BSN has been the Company's Vice
President -- Operations since January 1997. From July 1995 until January 1997,
she was the Company's Director of Training and Development. From January 1994
until July 1995, she served as a clinic administrator for the Company in the St.
Louis, Missouri region. From December 1990 until January 1994, Ms. Early was a
clinic administrator for Quality Care Dialysis Centers, Inc. Ms. Early is a
registered nurse.

JEFFERY C. FINCH has been a Vice President of the Company since December
1995. From June 1990 until December 1995, Mr. Finch served as Chief Executive
Officer of Dialysis Facilities, Inc., a dialysis company which owned three
dialysis facilities purchased by the Company in December 1995, which Mr. Finch
co-founded in 1990. He is a principal of JCD Partnership, a real estate and
property management firm. Mr. Finch is the brother of C. David Finch, M.D., a
Director of the Company.

EUGENE P. CONESE, SR. has been a Director of the Company since November
1996. Since 1987, he has been Chairman of the Board of Directors and Chief
Executive Officer of Greenwich Air Services, Inc., a provider of repair and
overhaul services for gas turbine aircraft engines. Mr. Conese is a Director of
Trans World Airlines, Inc. and is a member of the Board of Trustees of Iona
College.

C. DAVID FINCH, M.D. has been a Director of the Company since December
1995, when the Company acquired Dialysis Facilities, Inc., a dialysis company he
co-founded in 1990. He is a board certified nephrologist and maintains a private
practice of medicine in nephrology and hypertension in Jackson, Mississippi. Dr.
Finch serves as the Medical Director of the Company's dialysis facilities in the
Jackson, Mississippi area. He also serves as Director of Dialysis at Vicksburg
Medical Center and Parkview Regional Medical Center. He is a principal in JCD
Partnership, a real estate and property management firm, and the brother of
Jeffery C. Finch, a Vice President of the Company.

JOHN E. HUNT, SR. has been a Director of the Company since its inception in
July 1993. Since August 1983, Mr. Hunt has been Chairman of the Board of Hunt
Insurance Group, Inc., an insurance agency holding company. For the previous 40
years, Mr. Hunt was President of John E. Hunt & Associates, a Tallahassee and
Miami, Florida insurance agency. For the past 13 years, he has also been
President of Insurance Consultants and Analysis, Inc., an insurance consulting
firm. Mr. Hunt serves as Chairman of the Board of Trustees of the Florida Police
Chiefs' Education and Research Foundation, Inc., and as a trustee of Florida
Southern College. Mr. Hunt was a Director of Home Intensive Care, Inc. from 1985
until July 1993.

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46

CHARLES J. SIMONS has been a Director of the Company since its inception in
July 1993. Mr. Simons is the Chairman of the Board of G.W. Plastics, Inc., a
plastics manufacturer, and is an independent management and financial
consultant. From 1940 to 1981, he was employed by Eastern Airlines, last serving
as Vice Chairman, Executive Vice President and as a Director. Mr. Simons is a
Director of Arrow Air, Inc., a cargo air carrier; Bessemer Trust of Florida, an
investment management firm; Greenwich Air Services, Inc.; Calspan Corporation,
an aerospace company; and a number of private companies. He was also a Director
of Home Intensive Care, Inc. from 1988 until July 1993. Mr. Simons is the
Chairman of the Board of the Matthew Thornton Health Plan. From 1985 until 1992,
he was a Director of General Development Corp., now known as Atlantic Gulf
Development Corp., a real estate development company, and became Chairman of the
Board and Chief Executive Officer just prior to that company's Chapter 11
bankruptcy filing in April 1990. Mr. Simons resigned all positions prior to that
company's emergence from bankruptcy in 1992.

MARK D. WALLACE has been Secretary and a Director of the Company since the
Company's inception in July 1993. Since July 1992, Mark Wallace has been a
practicing attorney and is currently a partner at the law firm of Stack,
Fernandez and Anderson, P.A. Mr. Wallace is the son of Milton J. Wallace,
Chairman of the Board of the Company.

JEFFREY H. WATSON has been a Director of the Company since July 1994. Since
December 1995, he has been Chairman of the Board and President of J. Watson &
Co., a government relations and business consulting firm. From June 1994 until
December 1995, he was Vice President for Government Relations of the Jefferson
Group, an independent public affairs firm. From January 1993 until June 1994,
Mr. Watson served as Deputy Assistant for Inter-Governmental Affairs for the
Clinton Administration. From December 1991 through November 1992, Mr. Watson was
employed by the election campaign for President Clinton. From 1989 until
November 1991, Mr. Watson served as Finance Administrator for the City of Miami,
Florida's Department of Development and Housing Conservation. From 1986 until
January 1989, he served as an Administrative Assistant for the Mayor of Miami,
Florida. From September 1985 through March 1986, he was a Managing Partner and
Chief Financial Manager of J. Howard Industries, a company involved in
low-income housing redevelopment and construction.

BOARD OF DIRECTORS

The Company's Board of Directors is divided into three classes. The members
of each class serve for staggered three year terms, including three Class I
directors (Charles J. Simons, Jeffrey H. Watson and Eugene P. Conese, Sr.),
three Class II directors (Mark D. Wallace, John E. Hunt, Sr. and James P. Shea)
and three Class III directors (Milton J. Wallace, Arthur G. Shapiro and C. David
Finch). Class I, II and III director terms expire upon the election of directors
at the annual meeting of shareholders to be held in 1997, 1998 and 1999,
respectively. Directors hold office until the expiration of their respective
terms and until their successors are elected, or until death, resignation or
removal. Each officer serves at the discretion of the Board of Directors,
subject to certain contractual rights described below.

Following the consummation of the Offering, the Company intends to increase
the size of the Board of Directors by adding two additional non-employee
directors.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established standing Executive, Audit and
Compensation and Stock Option Committees. The Executive Committee consists of
Milton J. Wallace, Arthur G. Shapiro and James P. Shea. When the Board of
Directors is not in session, the Executive Committee possesses all of the powers
of the Board. Although the Executive Committee has broad powers, in practice it
meets infrequently to take formal action on a specific matter when it would be
impractical to call a meeting of the full Board.

The Audit Committee consists of Charles J. Simons and Jeffrey H. Watson.
The functions of the Audit Committee are to recommend to the Board the
appointment of independent public accountants for the annual audit of the
Company's financial statements; review the scope of the annual audit and

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47

other services the auditors are asked to perform; review the report on the
Company's financial statements following the audit; review the accounting and
financial policies of the Company; and review management's procedures and
policies with respect to the Company's internal accounting controls.

The Compensation and Stock Option Committee consists of Eugene P. Conese,
Sr., John E. Hunt, Sr. and Charles J. Simons. The functions of the Compensation
and Stock Option Committee are to review and approve salaries, benefits and
bonuses for all executive officers of the Company; to review and recommend to
the Board matters relating to employee compensation and benefit plans; and to
administer the Company's 1994 Employee Stock Option Plan.

DIRECTOR COMPENSATION

Directors who are officers or employees of the Company receive no
additional compensation for their services as members of the Board of Directors.
Prior to the Offering, non-employee directors did not receive any cash
compensation for service on the Board of Directors, but received reimbursement
of expenses. Following the Offering, non-employee directors of the Company will
receive such compensation for their services as the Board of Directors may from
time to time determine. Non-employee directors receive annual grants of options
under the Directors Stock Option Plan ("Directors Plan") described below. In
addition, Milton J. Wallace and Dr. Shapiro, as compensation for services
rendered to the Company, each received options to purchase 16,667 shares of
Common Stock in April 1995. Such options have an exercise price of $6.00 per
share and are exercisable through April 2000.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION INFORMATION. The following table summarizes the
compensation earned by, and paid to, the Company's President and Chief Executive
Officer and each other executive officer for the year ended December 31, 1996
who received compensation in excess of $100,000 for such period (the "Named
Executive Officers").

SUMMARY COMPENSATION TABLE

LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARD
----------------------------------------- ---------------------
OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION UNDERLYING OPTIONS(#)
- --------------------------------------------- ------------ -------- --------------- ---------------------

James P. Shea................................ $110,000 -- $5,160 13,334
President and Chief Executive Officer
Orestes L. Lugo.............................. 102,500 $4,000 $5,160 11,667
Vice President -- Finance and Chief
Financial Officer

- ---------------

(1) The Company provides its officers with certain non-cash group life and
health benefits generally available to all salaried employees. Such benefits
are not included in the above table pursuant to applicable Securities and
Exchange Commission rules. No Named Executive Officer received aggregate
personal benefits or perquisites that exceed the lesser of $50,000 or 10% of
his total annual salary and bonus for such year. Following the Offering, the
Named Executive Officers' salaries will be increased. See "Employment
Agreements" below.

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STOCK OPTION GRANTS. The following table sets forth information concerning
grants of stock options to each of the Named Executive Officers during the year
ended December 31, 1996:

OPTIONS GRANTED IN LAST FISCAL YEAR

POTENTIAL
REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES
---------------------------------------------------------------------- OF STOCK PRICE
NUMBER OF % OF TOTAL OPTIONS APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM($)(3)
UNDERLYING OPTIONS EMPLOYEES IN FISCAL PRICE PER -----------------
NAME GRANTED(#)(1) YEAR(2) SHARE EXPIRATION DATE 5% 10%
- ---------------------- ------------------ ------------------- --------- --------------- ----- ------

James P. Shea......... 13,334 17.2% $6.00 4/27/01 $-0- $-0-
Orestes L. Lugo....... 11,667 15.1% $6.00 4/27/01 -0- -0-

- ---------------

(1) All such options were granted pursuant to the 1994 Employee Stock Option
Plan. Options granted during fiscal year 1996 vest over three years, with
25% of such options vesting six months following the date of grant, 25% on
the first anniversary from the date of grant and 25% at the end of each
succeeding year from the grant date.
(2) Based on an aggregate of 77,510 options granted to employees in 1996,
including the Named Executive Officers.

(3) The exercise price on the date of grant was greater than the fair market
value of the underlying Common Stock by 153%. The potential realizable value
is calculated by assuming that the stock option price on the date of grant
appreciates at the indicated annual rate compounded annually for the entire
term of the options (5 years) and the option is exercised and the underlying
Common Stock sold on the last day of its term for the appreciated stock
price. The 5% and 10% assumed rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of the future Common Stock price. Based on
the assumed initial offering price of $8.00 per share, the potential
realizable values of the options for Mr. Shea would be $49,600 (5%) and
$76,100 (10%), and for Mr. Lugo would be $43,400 (5%) and $66,600 (10%).

YEAR-END OPTION HOLDINGS. The following table sets forth certain
aggregated option information for the Named Executive Officers for the year
ended December 31, 1996:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS(#) OPTIONS(2)
--------------------------- ---------------------------
NAME(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------- ----------- ------------- ----------- -------------

James P. Shea........................................ 15,419 17,916 $30,838 $35,832
Orestes L. Lugo...................................... 7,085 12,916 $14,710 $25,832

- ---------------

(1) No options were exercised by the above Named Executive Officers during the
fiscal year ended December 31, 1996.

(2) The value of unexercised options represents the difference between the
exercise price of the options and an assumed initial public offering price
of $8.00 per share herein.

EMPLOYMENT AGREEMENTS

In April 1997, the Company entered into two year employment agreements with
James P. Shea, the Company's President and Chief Executive Officer, and Orestes
L. Lugo, Vice President -- Finance and Chief Financial Officer. The employment
agreements provide for base salaries of $110,000 and $102,500 for Mr. Shea and
Mr. Lugo, respectively, with automatic increases to $190,000 and $155,000,
respectively, upon the earlier of the date of this Prospectus or a "change of
control" as defined below. Base salary for each officer is increased on January
1 of each year during the term by a minimum of 6%. Each officer receives an
automobile allowance and certain other non-cash benefits, including life, health
and disability insurance. Each employment agreement is automatically renewed for
two years at the end of the initial term and each extended term, unless either
party provides notice of termination at least 90 days prior to the expiration of
such term. If either officer is terminated without cause during the term of
their respective agreements, such officer will be entitled to severance equal to
the greater of the remaining base salary due under the agreement or one year's
base salary.

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49

Both Mr. Shea and Mr. Lugo are entitled to receive bonuses in each fiscal
year during the term of their agreements. Such agreements require the Board of
Directors to establish incentive bonus plans for each fiscal year which would
provide a means for each officer to earn a bonus up to 100% of their respective
base salaries upon the achievement of established goals and criteria.

The respective employment agreements grant to each of Mr. Shea and Mr. Lugo
the right to terminate his employment agreement within 90 days following a
"change of control," and to receive an amount equal to the greater of: (i) base
salary due for the remainder of the term of the agreement had it not been
terminated; or (ii) two years base salary. Such change of control severance is
payable 50% in cash on the effective date of such termination, with the balance
payable over a six month period. For the purposes of the employment agreements,
"change of control" is defined as: (i) the acquisition, other than from the
Company directly, by any person, entity or group, within the meaning of
sec. 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act"),
of beneficial ownership of 25% or more of the outstanding Common Stock; (ii) if
the individuals who serve on the Board as of the date of the employment
agreement, no longer constitute a majority of the members of the Board;
provided, however, any person who becomes a director subsequent to such date,
who was elected to fill a vacancy by a majority of the individuals then serving
on the Board, shall be considered as if a member prior to such date; (iii)
approval by a majority of the voting stock of the Company of a merger,
reorganization or consolidation whereby the shareholders of the Company
immediately prior to such approval do not, immediately after consummation of
such reorganization, merger or consolidation own more than 50% of the voting
stock of the surviving entity; or (iv) a liquidation or dissolution of the
Company, or the sale of all or substantially all of the Company's assets.

STOCK OPTION PLANS

EMPLOYEE PLAN

In April 1994, the Company's shareholders approved a 1994 Employee Stock
Option Plan ("Employee Plan"). The Employee Plan is designed as an incentive
program to cause employees to increase their interest in the Company's
performance and to attract and retain qualified personnel. Subject to certain
anti-dilution provisions, the Employee Plan consists of 666,667 shares of Common
Stock reserved for issuance upon the exercise of options which may be granted,
including 325,048 shares subject to outstanding options.

The Employee Plan is administered by the Compensation and Stock Option
Committee. The Compensation and Stock Option Committee has the discretion, among
other things, as to whom to grant options, the amount of options, the terms of
options and the exercise prices. All employees of the Company are eligible to
receive options under the Employee Plan. Such employees are eligible to receive
either "incentive" or "nonqualified" stock options, subject to the limitations
of the Internal Revenue Code of 1986, as amended (the "Code"). The exercise
price of an incentive stock option may not be less than 100% of the market price
of the underlying Common Stock as of the date of grant. No option may be granted
which has a term longer than 10 years. Stock options may have vesting
requirements as established by the Compensation and Stock Option Committee, but,
except in the case of an employee's death or permanent disability, in no event
may the options be exercisable until six months after grant. All vested options
under the Employee Plan become immediately vested in full upon a change of
control of the Company, as such term is defined in the Employee Plan.

Upon termination of an optionee's employment with the Company for any
reason, all options granted to such employee under the Employee Plan would
terminate immediately, except that the Compensation and Stock Option Committee
has the discretion to permit such holder to exercise vested options for a period
of 90 days after termination. Options granted under the Employee Plan may not be
transferred and are not exercisable except by the employee.

The Employee Plan provides for the automatic grant of "reload" options to
an employee, who pays all, or a portion of, an exercise price by delivery of
shares of Common Stock then owned by such employee. Reload options are granted
for each share of Common Stock so tendered. The exercise price of such reload
option is the then fair market value of the Common Stock. All other terms of the
reload

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50

options would be identical to the original options; provided, however, that if
the expiration date is less than one year, the expiration date is extended to
one year from the date of issuance of the reload options.

As of June 30, 1997, options to purchase a total of 325,048 shares of
Common Stock, with a weighted average exercise price of $6.98, have been granted
to executive officers and other employees of the Company. Each option granted
has a term of five years. Options are not exercisable until six months after the
date of grant and vest 25% at the end of six months and 25% on each anniversary
of such grant until 100% are vested.

DIRECTORS PLAN

In April 1994, the Company's shareholders adopted the Directors Plan.
Subject to certain anti-dilution provisions in the Plan, there are 166,667
shares of Common Stock reserved for issuance upon the exercise of options which
may be granted pursuant to the Directors Plan, including 30,016 shares subject
to outstanding options. All non-employee directors are eligible to receive
grants of options ("Eligible Directors"). Each Eligible Director receives
automatic, non-discretionary grants of options based upon specific criteria set
forth in the Directors Plan. On April 27 of each year, each Eligible Director
receives non-qualified options to purchase 834 shares of Common Stock for
service on the Board of Directors and additional options to purchase 334 shares
for service on each committee of the Board, other than the Executive Committee,
for which members would receive options to purchase 834 shares. Also, additional
options to purchase 334 shares are granted to Eligible Directors who serve as a
chairman of each standing committee of the Board, other than the chairman of the
Executive Committee, who would receive options to purchase 834 shares.

The exercise price of each option granted under the Directors Plan is equal
to the fair market value of the Common Stock on the date of grant as determined
in accordance with the provisions of the Directors Plan. All options granted
have a term of five years, but, except in the case of an Eligible Director's
death or permanent disability, are not exercisable until six months after the
date of grant. No option is transferable by the Eligible Director, except by the
laws of descent and distribution. If the Eligible Director's membership on the
Board terminates, including by reason of death, such options are exercisable for
the lesser of the remaining term of such option, or one year.

The Directors Plan provides for the automatic grant of "reload" options to
an Eligible Director, who pays all, or a portion of, an exercise price by
delivery of shares of Common Stock then owned by such Eligible Director. Reload
options are granted for each share of Common Stock so tendered. The exercise
price of such reload option is the then fair market value of the Common Stock.
All other terms of the reload options, including the expiration date, would be
identical to the original options, provided, however, that if the expiration
date is less than one year, the expiration date is extended to one year from the
date of issuance of the reload options.

As of June 30, 1997, options to purchase 30,016 shares of Common Stock,
with a weighted average exercise price of $6.71 per share, have been
automatically granted to Eligible Directors as a group.

401(K) PLAN

As of January 1997, the Company adopted a tax-qualified employee savings
and retirement plan (the "401(k) Plan") covering the Company's employees.
Pursuant to the 401(k) Plan, eligible employees may elect to contribute to the
401(k) Plan up to the lesser of 15% of their annual compensation or the
statutorily prescribed annual limit ($9,500 in 1996). The Company matches 25% of
the contributions of employees up to 4% of each employee's salary. All employees
who were employed at December 31, 1996 and new hires who thereafter attain at
least one year's service are eligible to participate in the 401(k) Plan.

The Trustees of the 401(k) Plan, at the direction of each participant,
invest the assets of the 401(k) Plan in designated investment options. The
401(k) Plan is intended to qualify under Section 401 of the Code, so that
contributions to the 401(k) Plan, and income earned on the 401(k) Plan
contributions are not taxable until withdrawn. Matching contributions by the
Company are deductible when made.

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51

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information as of August 31, 1997,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each person who is known by the Company to own more than 5% of such shares of
Common Stock; (ii) each Named Executive Officer; (iii) each of the Company's
directors; and (iv) all directors and executive officers as a group.

PERCENT OF SHARES
BENEFICIALLY OWNED
-------------------------
NUMBER OF SHARES PRIOR TO AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) OFFERING(3) OFFERING(4)
- --------------------------------------- --------------------- ----------- -----------

Arthur G. Shapiro, M.D.(5)........................... 769,759 19.4% 11.0%
Milton J. Wallace(6)................................. 743,558 18.7 10.7
James P. Shea(7)..................................... 216,688 5.5 3.2
C. David Finch, M.D.(8).............................. 195,947 4.9 2.8
John E. Hunt, Sr.(9)................................. 80,987 2.0 1.2
Orestes L. Lugo(10).................................. 60,403 1.5 *
Charles J. Simons(11)................................ 34,187 * *
Eugene P. Conese, Sr.(12)............................ 22,334 * *
Mark D. Wallace(13).................................. 15,336 * *
Jeffrey H. Watson(14)................................ 7,002 * *
All executive officers and directors as group
(13 persons)(15)................................... 2,283,666 57.5% 32.7%

- ---------------

* Less than one percent.
(1) Unless otherwise indicated, the address for each beneficial owner is c/o
the Company at 2100 Ponce de Leon Boulevard, Suite 950, Coral Gables,
Florida 33134.
(2) Except as set forth herein, all securities are directly owned and the sole
investment and voting power are held by the person named. A person is
deemed to be the beneficial owner of securities that can be acquired by
such person within 60 days of June 30, 1997 upon the exercise of options or
warrants.
(3) Based upon 3,974,247 shares of Common Stock issued and outstanding. Each
beneficial owner's percentage is determined by assuming that all such
exercisable options or warrants that are held by such person (but not those
held by any other person) have been exercised.
(4) Based upon 6,974,247 shares of Common Stock issued and outstanding
following the Offering.

(5) Except as set forth herein, all shares of Common Stock are owned jointly by
Dr. Shapiro and his wife. Includes: (i) 17,234 shares of Common Stock owned
by Dr. Shapiro's Individual Retirement Account; (ii) 21,669 shares of
Common Stock issuable upon exercise of stock options; (iii) 106,122 shares
of Common Stock (including 8,655 shares of Common Stock issuable upon
exercise of warrants and Series B Warrants) owned by a corporation, of
which Dr. Shapiro is an officer and director; and (iv) 3,750 shares of
Common Stock issuable upon exercise of Series B Warrants owned by Dr.
Shapiro's Individual Retirement Account.

(6) Mr. Wallace's address is 2222 Ponce de Leon Boulevard, Coral Gables,
Florida 33134. Except as set forth herein, all shares of Common Stock are
owned jointly by Mr. Wallace and his wife. Includes: (i) 12,000 shares of
Common Stock owned by Milton J. Wallace and his wife as custodian for a
minor child; (ii) 35,600 shares of Common Stock owned by Mr. Wallace's
Individual Retirement Account; (iii) 106,122 shares of Common Stock
(including 8,655 of Common Stock issuable upon exercise of warrants and
Series B Warrants) owned by a corporation, of which Mr. Wallace is an
officer, director and controlling stockholder, (iv) 20,836 shares of Common
Stock issuable upon exercise of stock options; and (v) 15,000 shares of
Common Stock issuable upon exercise of Series B Warrants owned by his
Individual Retirement Account.

(7) Except as set forth herein all shares are owned jointly by Mr. Shea and his
wife. Includes: (i) 32,087 shares of Common Stock issuable upon exercise of
stock options; (ii) 33,334 shares of Common Stock issuable upon exercise of
warrants; and (iii) 15,000 shares of Common Stock issuable upon exercise of
Series B Warrants.

(8) Includes 3,750 shares of Common Stock issuable upon exercise of stock
options.

(9) Includes: (i) 3,669 shares of Common Stock issuable upon exercise of stock
options; (ii) 6,667 shares of Common Stock issuable upon exercise of
warrants; (iii) 11,667 shares of Common Stock owned by Mr. Hunt's spouse;
(iv) 1,667 shares of Common Stock issuable upon exercise of warrants owned
by his spouse; and (v) 3,750 shares of Common Stock issuable upon exercise
of Series B Warrants. Mr. Hunt disclaims beneficial ownership of the shares
owned by his spouse.

(10) Includes: (i) 18,752 shares of Common Stock issuable upon exercise of stock
options; (ii) 3,334 shares of Common Stock issuable upon exercise of
warrants; and (iii) 3,750 shares of Common Stock issuable upon exercise of
Series B Warrants.

(11) Includes: (i) 5,002 shares of Common Stock issuable upon exercise of stock
options; (ii) 1,667 shares of Common Stock issuable upon exercise of
warrants; and (iii) 7,500 shares of Common Stock issuable upon exercise of
Series B Warrants.

(12) Includes: (i) 2,334 shares of Common Stock issuable upon exercise of stock
options; and (ii) 5,000 shares of Common Stock issuable upon exercise of
warrants.

(13) Includes 3,336 shares of Common Stock issuable upon exercise of stock
options.

(14) Includes 4,002 shares of Common Stock issuable upon exercise of stock
options.

(15) Includes: (i) 148,357 shares of Common Stock issuable upon exercise of
options; (ii) 58,336 shares of Common Stock issuable upon exercise of
warrants; and (iii) 54,488 shares of Common Stock issuable upon exercise of
Series B Warrants.

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CERTAIN TRANSACTIONS

In connection with the Company's formation in 1993, the Company issued an
aggregate of 1,000,000 shares of Series A Preferred Stock at $1.00 per share.
The following current directors and officers beneficially purchased Series A
Preferred Stock: Milton J. Wallace, 432,000 shares; Arthur G. Shapiro, 400,000
shares; James P. Shea, 20,000 shares; John E. Hunt, Sr., 8,000 shares; Charles
J. Simons, 8,000 shares; Mark D. Wallace, 8,000 shares and Patsy L. Anders,
8,000 shares. In August 1996, the Company authorized the redemption of all
1,000,000 shares of Series A Preferred Stock. All officers and directors set
forth above converted their shares of Series A Preferred Stock prior to the time
for redemption and received an aggregate of 589,334 shares of Common Stock. The
holders of Series A Preferred Stock received one share of Common Stock for every
1.5 shares of Series A Preferred Stock converted.

In April 1995, the Company issued options to purchase 16,667 shares of
Common Stock to each of Mr. Wallace and Dr. Shapiro, the Chairman and Vice
Chairman of the Company, respectively, as special compensation for services
rendered to the Company. The options are exercisable until April 2000 at $6.00
per share.

In December 1995, the Company purchased 100% of the capital stock of
Dialysis Facilities, Inc. ("DFI"), which was owned by C. David Finch, M.D.,
Charles D. Finch, Sr., and Jeffery Finch. In connection with the acquisition,
which was accounted for under the purchase method of accounting, the Company
issued 376,857 shares of Common Stock with an estimated value of $1.1 million in
the amounts, of which, 192,197, 90,446 and 94,214 shares of Common Stock were
issued to C. David Finch, M.D., Charles D. Finch, Sr. and Jeffery Finch,
respectively. C. David Finch and Jeffery Finch became a director and vice
president of the Company, respectively, effective upon consummation of the
acquisition of DFI. C. David Finch, M.D. also serves as the medical director of
the Company's three facilities acquired in the DFI transaction pursuant to a ten
year medical director employment agreement.

JCD Partnership, a real estate holding and property management firm, of
which C. David Finch, M.D., Jeffery Finch and Charles D. Finch, Sr. are the
principals, owns the real property and improvements at the Company's dialysis
facilities at Jackson, Mississippi and Delta, Louisiana. JCD Partnership leases
the properties to the Company pursuant to ten year leases, in which the Company
pays annual rent of $92,400 and $82,500, respectively. In connection with the
lease agreements, JCD Partnership, at its own expense, was required to construct
new buildings for the relocation of the dialysis facilities. The Company was
obligated to pay for the cost of leasehold improvements to be installed by JCD
Partnership. The Jackson, Mississippi and Delta, Louisiana buildings and
leasehold improvements were completed in November 1996 and May 1997,
respectively. The Company paid $282,000 and $313,000 to JCD Partnership in
connection with such improvements at each facility.

DFI owned a small parcel of property adjacent to the Delta, Louisiana
facility, which the Company sold to JCD Partnership in July 1996 for the book
value of $30,000.

C. David Finch, M.D. owed DFI approximately $85,000 at the time of DFI's
acquisition by the Company evidenced by a note. C. David Finch, M.D. is
obligated to repay the Company over a three-year period with interest at the
rate of 8% per annum. Such repayments are expected to come from any bonuses C.
David Finch, M.D. may earn in connection with his employment as a medical
director with the Company. The balance of the note, if not then paid, will be
payable upon demand by the Company at the end of three years. As of December 31,
1996 and August 31, 1997, approximately $85,000 in principal remained unpaid,
together with accrued interest of $6,800 and $11,333 as of such dates,
respectively.

On July 31, 1996, the Company completed a bridge financing incident to a
shareholders' rights offering commenced in August 1996, and issued an aggregate
of 1,050,000 shares of Series B Preferred Stock and Series B Warrants to
purchase 78,751 shares of Common Stock. The Company received gross proceeds of
$1,050,000 in connection with the Series B Preferred financing. The following
directors and officers beneficially purchased Series B Preferred Stock and
Series B Warrants: Milton J. Wallace,

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226,500 shares and 16,988 Series B Warrants; Dr. Arthur Shapiro, 126,500 shares
and 9,488 Series B Warrants; James P. Shea, 200,000 shares and 15,000 Series B
Warrants; John E. Hunt, Sr., 50,000 shares and 3,750 Series B Warrants; Charles
J. Simons, 100,000 shares and 7,500 Series B Warrants; and Orestes L. Lugo,
50,000 shares and 3,750 Series B Warrants. The Series B Preferred Stock was
called for redemption in November 1996. In connection with such redemption, the
holders thereof converted an aggregate of 775,000 shares of Series B Preferred
Stock into 268,250 shares of Common Stock including accrued dividends and the
Company redeemed 275,000 shares of Series B Preferred Stock for $275,000, plus
accrued dividends. The holders of the Series B Preferred Stock were entitled to
receive one share of Common Stock for every three shares of Series B Preferred
Stock converted, as well as one share of Common Stock for every $3.00 in accrued
dividends, in lieu of cash. The shares of Common Stock received upon conversion
of the Series B Preferred Stock were at the same price as the Common Stock sold
in the shareholders' rights offering.

Milton J. Wallace, Chairman of the Board of Directors of the Company, is a
shareholder of the law firm of Wallace, Bauman, Fodiman & Shannon, P.A. The law
firm serves as general counsel to the Company for which the firm received
$133,000 during 1996.

John E. Hunt, Sr., a Director of the Company, is Chairman of the Board of
Directors of Hunt Insurance Group, Inc., an insurance agency. Hunt Insurance
Group, Inc. arranges for various types of insurance policies for the Company and
receives commissions as a result of such policies.

DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, $.001 par value, and 5,000,000 shares of preferred stock, $.01
par value. As of the date of this Prospectus, there were 3,974,247 shares of
Common Stock presently issued and outstanding, held of record by 239
shareholders. Upon completion of this Offering, there will be 6,974,247 shares
of Common Stock issued and outstanding. No shares of preferred stock are
outstanding.

COMMON STOCK

Each outstanding share of Common Stock is entitled to one vote, either in
person or by proxy, in all matters that can be voted upon by the owners thereof
at meetings of shareholders. The holders of Common Stock: (i) have equal ratable
rights to dividends from funds legally available therefore when, as and if
declared by the board of directors of the Company; (ii) are entitled to share
ratably in all of the assets of the Company available for distribution to
holders of Common Stock upon liquidation, dissolution or winding up of the
affairs of the Company; (iii) do not have preemptive, subscription or conversion
rights, or redemption or sinking fund provisions applicable thereto; and (iv)
are entitled to one non-cumulative vote per share in all matters on which
shareholders may vote at all meetings of shareholders.

PREFERRED STOCK

The Board of Directors is authorized by the Company's Articles of
Incorporation, without any action of the shareholders, to issue one or more
class or series of preferred stock and to determine the dividend rights,
dividend rates, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, sinking fund provisions and designations of such class
or series. The Company has no present intention to issue any shares of preferred
stock.

The Company's Board of Directors could issue a series of preferred stock,
the terms of which, subject to certain limitations imposed by securities laws,
may impede the completion of a merger, tender offer or other takeover attempt.
The Company's Board of Directors will make any determination to issue such
shares based on its judgment as to the best interest of the Company and its
shareholders at the time of issuance. The Company's Board of Directors, in so
acting, could issue preferred stock having terms which could discourage an
acquisition attempt or other transaction that

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some, or a majority, of the shareholders might believe to be in their best
interests or in which shareholders might receive a premium for their stock over
the then market price of such stock.

WARRANTS

Upon completion of the Offering, the Company will have four different
classes of warrants: (i) warrants to purchase 246,201 shares of Common Stock
exercisable until December 9, 1998 at an exercise price of $9.00 per share (the
"Warrants"); (ii) warrants to purchase 78,751 shares of Common Stock exercisable
until July 31, 1999 at an exercise price of $6.00 per share (the "Series B
Warrants"); (iii) warrants to purchase 116,669 shares of Common Stock
exercisable until November 15, 1999 at an exercise price of $3.00 per share (the
"Advisor Warrants"); and (iv) the Representatives' Warrants. A warrant to
purchase 211,023 shares of Common Stock issued in connection with certain
indebtedness will be redeemed upon consummation of this Offering. See "Use of
Proceeds."

The Company is not required to issue fractional shares upon exercise of any
warrants, but may make cash payments thereof, based on the then market price of
the Common Stock. No holder of any warrants will be entitled to vote, receive
dividends, or be deemed the holder of the Common Stock until such time as the
warrants shall have been duly exercised and payment of the purchase price shall
have been made. Shares of Common Stock issued upon the exercise of the warrants
and on payment of the purchase price will be legally issued, fully paid and
non-assessable.

WARRANTS

The Warrants were issued in December 1994. No adjustments as to dividends,
except stock dividends, will be made upon the exercise of the Warrants. The
Warrants are subject to equitable adjustment upon certain events, which include:
(i) the issuance of Common Stock as a dividend on the outstanding Common Stock;
(ii) subdivisions, combinations, and reclassifications of Common Stock; and
(iii) mergers, consolidations and similar events. The Warrants are redeemable at
the option of the Company in whole at any time or in part from time to time upon
30 days written notice to the holders of the Warrants at the redemption price of
$.30 per Warrant.

SERIES B WARRANTS

The Series B Warrants were issued in connection with the Company's sale of
1,050,000 shares of Series B Preferred Stock completed as of July 31, 1996. See
"Certain Transactions." No adjustments as to dividends, except stock dividends,
will be made upon the exercise of the Series B Warrants. The Series B Warrants
are subject to equitable adjustment upon certain events, which include: (i) the
issuance of Common Stock as a dividend on the outstanding Common Stock; (ii)
subdivisions, combinations, and reclassifications of Common Stock; and (iii)
mergers, consolidations and similar events. The holders of the Series B Warrants
have certain piggy-back registration rights, which have been waived in
connection with this Offering. See "Description of Securities -- Registration
Rights."

ADVISOR WARRANTS

The Advisor Warrants were issued to a financial advisor of the Company in
November 1996 in connection with services to be performed under a six month
advisory agreement. No adjustment as to dividends, except stock dividends, will
be made upon exercise of the Advisor Warrants. The Advisor Warrants are subject
to equitable adjustment upon certain events, including: (i) the issuance of
Common Stock for a price less than the exercise price of $3.00 per share; (ii)
subdivisions, combinations and reclassifications of the Common Stock; and (iii)
mergers, consolidations and similar events. The holder of the Advisor Warrants
has certain demand registration rights commencing six months following the
completion of the Offering and certain piggy-back registration rights, which
have been waived by the holders in connection with this Offering. See
"Description of Securities -- Registration Rights."

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REPRESENTATIVES' WARRANTS

The Company has agreed to issue to the Representatives warrants to purchase
an aggregate of 300,000 shares of Common Stock at an exercise price equal to
107% of the initial public offering price set forth on the cover page of this
Prospectus. The Representatives' Warrants are exercisable for a period of five
years, beginning on the date of this Prospectus. The Company has granted the
holders of the Representatives' Warrants certain demand and piggy-back
registration rights with respect to the shares of Common Stock issuable upon the
exercise of such warrants. See "Description of Securities -- Registration
Rights" and "Underwriting."

ANTI-TAKEOVER PROVISIONS

Certain portions of the Company's Articles of Incorporation and By-laws may
make more difficult the acquisition of control of the Company by various means,
such as a tender offer, a proxy contest or otherwise. These provisions encourage
persons seeking to acquire control of the Company to consult first with the
Company's Board of Directors to negotiate the terms of any proposed business
combination or offer. The provisions are designed to reduce the vulnerability of
the Company to an unsolicited proposal for a takeover that does not contemplate
the acquisition of all outstanding shares of capital stock or which is otherwise
unfair to shareholders of the Company.

CLASSIFIED BOARD OF DIRECTORS

The Company's Articles of Incorporation provide for the Company's Board of
Directors to be divided into three classes, as nearly equal in number as is
reasonably possible, serving three year staggered terms, so that directors'
terms expire either at the 1997, 1998 or 1999 annual meeting of the Company's
shareholders. See "Management."

ADVANCE NOTICE

The Company's By-laws contain provisions relating to notice of shareholder
meetings, which would prohibit a shareholder from nominating a person to the
Board of Directors or proposing certain actions relating to the Company's
business without advance written notice to the Company. Such written notice must
be received a minimum of 90 days prior to a shareholders' meeting and must
contain specific information about the nominee and the shareholder who makes
such nomination or proposal.

ANTI-TAKEOVER PROVISIONS OF FLORIDA LAW

The Company is subject to the anti-takeover provisions of Section 607.0901
of the Florida Business Corporation Act (the "Affiliated Transaction Statute").
In general, the Affiliated Transaction Statute requires the approval of the
holders of two-thirds of the voting shares of a corporation, other than shares
owned by an "interested shareholder," in order to effect an "affiliated
transaction," such as a merger, sale of assets, or sale of shares, between a
corporation and an interested shareholder. An "interested shareholder" is
defined as a beneficial owner of 10% or more of the outstanding voting
securities of the corporation. Such approval is not required where: (i) the
affiliated transaction is approved by a majority of the disinterested directors;
(ii) the interested shareholder owns 90% or more of the corporation's
outstanding voting stock, or has owned 80% or more for five years; or (iii) the
consideration paid in connection with the affiliated transaction satisfies the
statutory "fair price" formula and the transaction meets certain other
requirements. A corporation may elect, by the vote of a majority of the
outstanding voting securities of the corporation (not including shares held by
an interested shareholder), or by amendment to the articles or by-laws of the
corporation, not to be subject to the provisions of the Affiliated Transaction
Statute. The election will not be effective until 18 months after it is made,
and will not apply to any affiliated transaction between the corporation and
someone who was an interested shareholder prior to the effective date of the
election.

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The Company may also be subject to the provisions of Section 607.0902 of
the Florida Business Corporation Act (the "Control Share Acquisition Statute").
Under such statute, "control shares" of certain corporations acquired in a
"control share acquisition," with certain exceptions, have no voting rights
unless such rights are granted pursuant to a vote of the holders of a majority
of the corporation's voting securities (excluding all "interested shares").
"Control shares" are shares that, when added to all other shares which a person
owns or has the power to vote, would give that person any of the following
grants of voting power: (i) one-fifth or more but less than one-third of the
voting power; (ii) one-third or more but less than a majority of the voting
power; and (iii) more than a majority of the voting power. A "control share
acquisition" is the acquisition of ownership of, or the power to vote,
outstanding control shares. Shares acquired within 90 days, or as part of a plan
to effect a control share acquisition, are deemed to have been acquired in the
same transaction. "Interested shares" include shares held by the person
attempting to effect the control share acquisition, and shares held by
employee-directors or officers of the corporation. A corporation may elect not
to be subject to the Control Share Acquisition Statute by amendment to its
articles or by-laws.

REGISTRATION RIGHTS

The holders of 333,334 shares of Common Stock (the "Holders") are entitled
to certain rights with respect to the registration of such shares under the
Securities Act of 1933, as amended (the "Securities Act"). Under the terms of an
agreement between the Company and such Holders, such Holders, commencing two
years following receipt of Medicare certification of a proposed dialysis
facility in New Jersey (which the Company expects to receive by the end of the
first quarter of 1998), may require the Company to file a registration statement
covering such shares under the Securities Act, at the Company's expense.
However, such registration rights will not be exercisable if the provisions of
Rule 144 would allow the sale of such shares. In addition, following the
Offering, if the Company thereafter proposes to register any of its Common
Stock, subject to certain exceptions, the Holders are entitled to include their
shares of Common Stock in such registration, at the Company's expense.

Holders of the Series B Warrants have certain rights with respect to the
registration of 78,751 shares of Common Stock underlying the Series B Warrants.
If the Company proposes to register any of its Common Stock, the holders of the
Series B Warrants are entitled to include, subject to such limitations imposed
by the managing underwriters of such offering, their shares of Common Stock in
such registration, at the Company's expense. All of the holders of the Series B
Warrants have waived their right to be included in the Offering.

Holders of the Advisor Warrants also have certain rights with respect to
the registration of the 116,669 shares of Common Stock underlying the Advisor
Warrants. If the Company proposes to register any of its Common Stock, the
holders of the Advisor Warrants are entitled to include, subject to such
limitations imposed by the managing underwriters of such offering, their shares
of Common Stock in such registration, at the Company's expense. All of the
holders of the Advisor Warrants have waived their right to be included in the
Offering. In addition, the holders of the Advisor Warrants have demand
registration rights commencing six months following the completion of this
Offering.

The Company has also granted certain demand and piggy-back registration
rights to the Representatives with respect to the Common Stock issuable upon
exercise of the Representatives' Warrants. See "Underwriting."

TRANSFER AGENT

The Transfer Agent for the Common Stock of the Company is Continental Stock
Transfer and Trust Company, New York, New York.

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SHARES ELIGIBLE FOR FUTURE SALE

Future sales of shares of Common Stock by the Company's current
shareholders could adversely affect the market price of the Common Stock. Upon
completion of the Offering, the Company will have outstanding an aggregate of
6,974,247 shares of Common Stock. In addition, the Company has reserved for
issuance 1,145,854 shares issuable upon exercise of outstanding options and
warrants, including the Representatives' Warrants. The 3,000,000 shares of
Common Stock offered hereby will be freely transferable without restriction or
further registration under the Securities Act, except for such shares acquired
by affiliates of the Company. Shares purchased by affiliates of the Company
would be subject to certain volume and other restrictions upon resale as
described below.

The remaining 3,947,247 shares of Common Stock held by existing
shareholders are "restricted securities" as that term is defined by Rule 144
under the Securities Act. Pursuant to certain "lock-up" agreements, the
Company's directors, officers and certain of its shareholders who collectively
hold an aggregate of 3,894,659 shares of Common Stock, together with the
Company, have agreed that they will not offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock without the prior written consent of
Vector Securities International, Inc. for a period of 180 days following the
date of this Prospectus. Following the 180-day period, approximately 1,534,498
shares of Common Stock will be eligible for sale in the public market without
restriction pursuant to Rule 144(k), and an additional 2,360,161 shares will be
eligible for sale under Rule 144, subject to certain volume, manner of sale and
other restrictions of Rule 144. Of the 79,588 shares of restricted Common Stock
held by existing shareholders of the Company not subject to lock-up agreements,
77,422 shares will be eligible for immediate sale in the public market without
restriction under Rule 144(k). The remaining 2,166 shares of Common Stock not
subject to lock-up agreements will become eligible for sale, subject to certain
volume, manner of sale and other limitations under Rule 144 commencing 90 days
following the date of this Prospectus. In addition, holders of stock options or
warrants, including the Representatives' Warrants, exercisable for an aggregate
of 1,145,854 shares of Common Stock have entered into agreements prohibiting the
sales of the underlying Common Stock for 180 days following the date of this
Prospectus. In addition, the Representatives' are generally prohibited from
selling or otherwise transferring the Representatives' Warrants for twelve
months from the date of this Prospectus. See "Principal Shareholders" and
"Underwriting."

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, any person who has beneficially owned restricted
securities for at least one year will be entitled to sell in any three-month
period a number of shares that does not exceed the greater of: (i) one percent
of the then outstanding shares of the Company's Common Stock (approximately
69,000 shares immediately after the Offering); or (ii) the average weekly
trading volume of the Company's Common Stock in the Nasdaq National Market
during the four calendar weeks immediately preceding the date on which notice of
the sale is filed with the Securities and Exchange Commission. Sales pursuant to
Rule 144 are subject to certain requirements relating to manner of sale, notice
and availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed to have been an affiliate
of the Company at any time during the 90 days immediately preceding the sale and
who has beneficially owned the shares proposed to be sold for at least two years
is entitled to sell such shares under Rule 144(k) without regard to the
limitations described above.

The Company intends to file a registration statement under the Securities
Act covering shares of Common Stock reserved for issuance under the Employee
Plan. Based on the options outstanding and shares reserved for issuance as of
the date of this Prospectus, such registration statement would cover
approximately 325,048 shares. Such registration statement is expected to be
filed and to become effective as soon as practicable after the date of this
Prospectus. Shares registered in such registration will, subject to Rule 144
volume limitations applicable to affiliates, be available for sale in the open
market upon expiration of the contractual restrictions discussed above. Holders
of warrants to purchase an aggregate of 495,420 shares of Common Stock including
the Representatives' Warrants have been granted certain registration rights. See
"Management" and "Description of Securities -- Registration Rights."

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UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
underwriters named below (the "Underwriters"), for whom Vector Securities
International, Inc. and Needham & Company, Inc. are acting as representatives
(the "Representatives"), have severally agreed to purchase, subject to the terms
and conditions of the Underwriting Agreement, and the Company has agreed to sell
to the Underwriters, the following respective numbers of shares of Common Stock:

UNDERWRITERS NUMBER OF SHARES
- ------------ ----------------

Vector Securities International, Inc. ......................
Needham & Company, Inc. ....................................

---------
Total............................................. 3,000,000
=========

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, including the absence
of any material adverse change in the Company's business and the receipt of
certain certificates, opinions and letters from the Company and its counsel. The
nature of the Underwriters' obligation is such that they are committed to
purchase all shares of Common Stock offered hereby, if any of such shares are
purchased. The Underwriting Agreement contains certain provisions whereby if any
Underwriter defaults in its obligation to purchase shares, and the aggregate
obligations of the Underwriters so defaulting do not exceed 10% of the shares
offered hereby, the remaining Underwriters, or some of them, must assume such
obligations.

The Underwriters propose to offer the shares of Common Stock directly to
the public at the offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of
$ per share. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per share to certain other dealers.
After the public offering of the shares of Common Stock, the offering price and
other selling terms may be changed by the Representatives.

The Company has granted to the Underwriters an option, exercisable at any
time during the 30-day period no later than 30 days after the date of this
Prospectus, to purchase up to 450,000 additional shares of Common Stock at the
public offering price set forth on the cover page of this Prospectus, less
underwriting discounts and commissions. The Underwriters may exercise such
option solely for the purpose of covering over-allotments, if any, in connection
with the Offering. To the extent such option is exercised, each Underwriter will
be obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares of Common Stock set
forth next to such Underwriter's name in the preceding table bears to the total
number of shares listed in the table. The Company will be obligated, pursuant to
the option, to sell such shares to the Underwriters to the extent the option is
exercised.

In connection with the Offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may overallot the Offering,
creating a syndicate short position. In addition, the Underwriters may bid for
and purchase shares of Common Stock in the open market to cover syndicate short
positions or to stabilize the price of the Common Stock. Finally, the
underwriting syndicate may reclaim selling concessions from syndicate members in
the Offering, if the syndicate repurchases previously distributed Common Stock
in syndicate covering transactions, in stabilization transactions or otherwise.
Any of these activities may stabilize or maintain the market price of the Common
Stock above independent market levels. The Underwriters are not required to
engage in these activities, and may end any of these activities at any time.

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The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

The Company has agreed to issue to the Representatives warrants to purchase
up to an aggregate of 300,000 shares of Common Stock, exercisable for a period
of five years commencing on the date of this Prospectus, at a price equal to
107% of the initial public offering price set forth on the cover page of this
Prospectus. The Representatives' Warrants contain provisions providing for
adjustment of the exercise price and the number and type of securities issuable
upon the exercise thereof upon the occurrence of certain events, including the
issuance of any shares of Common Stock or other securities convertible into or
exercisable for shares of Common Stock at a price per share less than the
exercise price, or the market price of the Common Stock, or in the event of any
stock dividend, stock split, stock combination or similar transaction. Holders
of the Representatives' Warrants have been granted certain demand and piggy-back
registration rights under the Securities Act with respect to the securities
issuable upon exercise of the Representatives' Warrants. For a period of twelve
months from the date of this Prospectus, the Representatives are generally
prohibited from selling or otherwise transferring the Representatives' Warrants
or the Common Stock underlying the Representatives' Warrants. Thereafter, the
Representatives' Warrants will be transferable subject to compliance with the
Securities Act. See "Description of Securities -- Registration Rights" and
'Shares Eligible For Future Sale."

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.

The officers, directors and certain other shareholders of the Company have
agreed, that they will not, without the prior written consent of Vector
Securities International, Inc., offer, sell or otherwise dispose of any shares
of Common Stock, options or warrants to acquire shares of Common Stock or
securities exchangeable for or convertible into shares of Common Stock owned by
them for a period of 180 days after the date of this Prospectus. The Company has
agreed that it will not, without the prior written consent of Vector Securities
International, Inc., offer, sell or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock or securities
exchangeable for or convertible into shares of Common Stock for a period of 180
days after the date of this Prospectus. See "Shares Eligible For Future Sales."

Prior to the Offering, there has been no public market for the Common
Stock. Consequently, the initial public offering price for the shares of Common
Stock included in the Offering will be determined by negotiations between the
Company and the Representatives. Among the factors to be considered in
determining such price will be: the history of, and the prospects for, the
Company's business and the industry in which it competes; an assessment of the
Company's management and the present state of the Company's development; the
past and present revenues and earnings of the Company; the prospects for growth
of the Company's revenues and earnings; the current state of the economy in the
United States; and the current level of economic activity in the industry in
which the Company competes and in related or comparable industries, and
currently prevailing conditions in the securities markets, including current
market valuations of publicly traded companies that are comparable to the
Company.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
and certain other legal matters will be passed upon for the Company by Wallace,
Bauman, Fodiman & Shannon, P.A., Coral Gables, Florida and Haythe & Curley, New
York, New York. Milton J. Wallace, Chairman of the Board of the Company, is a
shareholder of Wallace, Bauman, Fodiman & Shannon, P.A. and beneficially owns
743,558 shares of Common Stock. Other shareholders of such firm beneficially own
an aggregate of 22,197 shares of Common Stock. Certain legal matters in
connection with the Offering will be passed upon for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom (Illinois), Chicago, Illinois. Haythe &
Curley and Skadden, Arps, Slate, Meagher & Flom (Illinois) will rely on the
opinion of Wallace, Bauman, Fodiman & Shannon, P.A., as to matters of Florida
law.

57
60

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1996, and for the years ended December 31, 1995 and 1996, included in
this Prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing herein, and are included in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.

The consolidated financial statements of the Company for the year ended
December 31, 1994 appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent certified public accountants, as
set forth in their report therein appearing elsewhere herein, and are included
in reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

The statements of law in this Prospectus under the captions "Risk
Factors -- Dependence upon Government Reimbursement," "Risk
Factors -- Operations Subject to Extensive Government Regulation,"
"Business -- Sources of Reimbursement" and "Business -- Government Regulation"
have been reviewed and approved by Lashly & Baer, health care counsel for the
Company, as experts on such matters, and are included herein in reliance upon
that review and approval.

ADDITIONAL INFORMATION

A Registration Statement on Form S-1, including amendments thereto,
relating to the Common Stock offered by the Company has been filed with the
Securities and Exchange Commission, Washington, D.C. 20549 ("Commission"). This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. Statements contained in this
Prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and in each instance reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. A copy of the Registration Statement may be
inspected by anyone without charge at the public reference facilities maintained
by the Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at the Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, 13th Floor, New York, New York 10048, and copies of all or
any part thereof may be obtained from such offices, upon payment of certain fees
prescribed by the Commission. The Commission maintains a World Wide Website that
contains reports, proxy and information statements and other information filed
electronically with the Commission. The address of the Commission's World Wide
Website is http://www.sec.gov.

Following the effective date of the Registration Statement, the Company
will be subject to the information requirements of the Securities Exchange Act
of 1934, and in accordance therewith will file reports, proxy statements and
other information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission in Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 or through the Commission's World Wide Website.

58
61

RENEX CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Report of Independent Auditors.............................. F-2
Report of Independent Certified Public Accountants.......... F-3
Consolidated Balance Sheets as of December 31, 1995 and 1996
and June 30, 1997 (unaudited)............................. F-4
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995 and 1996 and the Six Months Ended
June 30, 1996 and 1997 (unaudited)........................ F-5
Consolidated Statements of Shareholders' Equity for the
Years Ended December 31, 1994, 1995 and 1996 and the Six
Months Ended June 30, 1996 and 1997 (unaudited)........... F-6
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1995 and 1996 and the Six Months Ended
June 30, 1996 and 1997 (unaudited)........................ F-7
Notes to Consolidated Financial Statements.................. F-8

F-1
62

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of
Renex Corp. and Subsidiaries
Miami, Florida:

We have audited the accompanying consolidated balance sheets of Renex Corp.
and Subsidiaries (the "Company") as of December 31, 1995 and 1996 and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the two years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such 1995 and 1996 consolidated financial statements
present fairly, in all material respects, the financial position of the Company
as of December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the two years then ended in conformity with generally accepted
accounting principles.

DELOITTE AND TOUCHE LLP

Miami, Florida
April 18, 1997, except for Note 18
for which the date is April 22, 1997

F-2
63

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Shareholders
Renex Corp. and Subsidiaries

We have audited the accompanying consolidated statements of operations,
shareholders' equity and cash flows of Renex Corp. and Subsidiaries (the
"Company") for the year ended December 31, 1994. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated result of operations and cash flows
of the Company for the year ended December 31, 1994 in conformity with generally
accepted accounting principles.

ERNST & YOUNG LLP

Miami, Florida
March 8, 1995

F-3
64

RENEX CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
------------------------- JUNE 30,
1995 1996 1997
----------- ----------- -----------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,234,000 $ 952,000 $ 781,000
Accounts receivable (net of allowance for doubtful
accounts of $393,000 in 1995, $1,261,000 in 1996 and
$1,336,000 as of June 30, 1997)......................... 3,693,000 4,535,000 5,907,000
Inventories............................................... 272,000 347,000 390,000
Prepaids and other........................................ 35,000 225,000 473,000
----------- ----------- -----------
Total current assets............................... 5,234,000 6,059,000 7,551,000
Fixed assets, net........................................... 3,774,000 6,042,000 6,526,000
Intangible assets, net...................................... 1,058,000 1,309,000 1,196,000
Notes receivable from affiliates (interest rate at 9%
(1995), 8% (1996)
and 8% (June 30, 1997))................................... 112,000 85,000 85,000
Other assets, including $1,384,000 in 1995, $1,168,000 in
1996 and $1,058,000 as of June 30, 1997 of deferred
financing costs........................................... 1,637,000 1,666,000 1,737,000
----------- ----------- -----------
TOTAL ASSETS....................................... $11,815,000 $15,161,000 $17,095,000
=========== =========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 756,000 $ 708,000 $ 1,517,000
Accrued expenses and other................................ 520,000 2,393,000 2,353,000
Note payable to bank...................................... 337,000 -- --
Notes payable to affiliates............................... 94,000 -- --
Current portion of long-term debt......................... 113,000 46,000 7,000
Current portion of capital lease obligations.............. 363,000 523,000 403,000
----------- ----------- -----------
Total current liabilities.......................... 2,183,000 3,670,000 4,280,000
----------- ----------- -----------
Line of credit.............................................. 1,000,000
-----------
Long-term debt, less current portion........................ 4,810,000 6,184,000 6,193,000
----------- ----------- -----------
Capital lease obligations, less current portion............. 658,000 990,000 1,796,000
----------- ----------- -----------
Shareholders' equity:
Series A redeemable preferred stock, $.01 par value,
5,000,000 shares authorized, 1,000,000 shares issued and
outstanding (1995)...................................... 10,000 -- --
Common stock, $.001 par value, 30,000,000 shares
authorized, 2,358,857 shares (1995), 3,970,114 shares
(1996) and 3,974,247 shares (June 30, 1997) issued and
outstanding............................................. 2,000 3,000 3,000
Additional paid-in capital.................................. 6,503,000 9,151,000 9,163,000
Accumulated deficit......................................... (2,351,000) (4,837,000) (5,340,000)
----------- ----------- -----------
Total shareholders' equity......................... 4,164,000 4,317,000 3,826,000
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......... $11,815,000 $15,161,000 $17,095,000
=========== =========== ===========

See accompanying notes to consolidated financial statements.

F-4
65

RENEX CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------------------------- ------------------------
1994 1995 1996 1996 1997
---------- ----------- ----------- ---------- -----------
(UNAUDITED)

Net revenues................................ $2,746,000 $ 8,794,000 $18,569,000 $8,320,000 $12,432,000
Operating expenses:
Facilities................................ 2,405,000 6,809,000 14,625,000 6,354,000 9,679,000
General and administrative................ 1,025,000 1,682,000 2,681,000 1,163,000 1,304,000
Provision for doubtful accounts........... 93,000 495,000 1,293,000 561,000 493,000
Depreciation and amortization............. 126,000 509,000 1,642,000 577,000 787,000
---------- ----------- ----------- ---------- -----------
Operating income (loss)................. (903,000) (701,000) (1,672,000) (335,000) 169,000
Other income (expenses):
Gain (loss) on sale of assets............. -- -- 364,000 -- (27,000)
Net interest income (expense)............. 61,000 (360,000) (915,000) (419,000) (537,000)
Amortization of deferred financing
costs................................... -- (126,000) (226,000) (108,000) (108,000)
---------- ----------- ----------- ---------- -----------
Net (loss).................................. $ (842,000) $(1,187,000) $(2,449,000) $ (862,000) $ (503,000)
========== =========== =========== ========== ===========
Net (loss) per share........................ $ (.31) $ (.40) $ (.66) $ (.25) $ (.12)
========== =========== =========== ========== ===========
Weighted average number of common shares and
equivalents outstanding................... 2,759,884 2,963,193 3,693,617 3,503,664 4,067,747
========== =========== =========== ========== ===========

See accompanying notes to consolidated financial statements.

F-5
66

RENEX CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

COMMON STOCK
REDEEMABLE REDEEMABLE ------------------- COMMON
PREFERRED STOCK PREFERRED STOCK NUMBER OF ADDITIONAL STOCK
SERIES A SERIES B SHARES AMOUNT PAID-IN CAPITAL SUBSCRIBED
--------------- --------------- --------- ------- --------------- ----------

Balance at January 1, 1994............ $ 10,000 1,733,333 $2,000 $3,913,000
Sale of common stock through
exercise of warrants (net of
expenses of $15,000).............. 111,667 655,000 $ 290,000
Repurchase of warrants.............. (72,000)
Sale of common stock................ 23,000 139,000
Net loss............................
-------- ------- --------- ------ ---------- ---------
Balance at December 31, 1994.......... 10,000 1,868,000 2,000 4,635,000 290,000
Sale of common stock through
exercise of warrants (net of
expenses of $9,000)............... 45,000 261,000 (290,000)
Sale of common stock................ 64,333 386,000
Stock warrants issued with debt..... 150,000
Issuance of common stock............ 4,667 20,000
Issuance of common stock for
acquisition....................... 376,857 1,051,000
Net loss............................
-------- ------- --------- ------ ---------- ---------
Balance at December 31, 1995.......... 10,000 2,358,857 2,000 6,503,000
Issuance of common stock for
acquisition....................... 333,333 790,000
Sale of common stock (net of
expenses of $21,000).............. 351,007 1,058,000
Issuance of preferred stock......... $11,000 1,039,000
Conversion of preferred stock....... (10,000) (8,000) 926,917 1,000 47,000
Redemption of preferred stock....... (3,000) (286,000)
Net loss............................
-------- ------- --------- ------ ---------- ---------
Balance at December 31, 1996.......... 3,970,114 3,000 9,151,000
Sale of common stock (unaudited).... 4,133 12,000
Net loss (unaudited)................
-------- ------- --------- ------ ---------- ---------
Balance at June 30, 1997
(unaudited)......................... $ $ 3,974,247 $3,000 $9,163,000 $
======== ======= ========= ====== ========== =========

SUBSCRIPTIONS
RECEIVABLE FROM
EXERCISE OF ACCUMULATED
WARRANTS DEFICIT TOTAL
--------------- ----------- -----------

Balance at January 1, 1994............ $ (322,000) $ 3,603,000
Sale of common stock through
exercise of warrants (net of
expenses of $15,000).............. $(290,000) 655,000
Repurchase of warrants.............. (72,000)
Sale of common stock................ 139,000
Net loss............................ (842,000) (842,000)
--------- ----------- -----------
Balance at December 31, 1994.......... (290,000) (1,164,000) 3,483,000
Sale of common stock through
exercise of warrants (net of
expenses of $9,000)............... 290,000 261,000
Sale of common stock................ 386,000
Stock warrants issued with debt..... 150,000
Issuance of common stock............ 20,000
Issuance of common stock for
acquisition....................... 1,051,000
Net loss............................ (1,187,000) (1,187,000)
--------- ----------- -----------
Balance at December 31, 1995.......... (2,351,000) 4,164,000
Issuance of common stock for
acquisition....................... 790,000
Sale of common stock (net of
expenses of $21,000).............. 1,058,000
Issuance of preferred stock......... 1,050,000
Conversion of preferred stock....... (30,000)
Redemption of preferred stock....... (7,000) (296,000)
Net loss............................ (2,449,000) (2,449,000)
--------- ----------- -----------
Balance at December 31, 1996.......... (4,837,000) 4,317,000
Sale of common stock (unaudited).... 12,000
Net loss (unaudited)................ (503,000) (503,000)
--------- ----------- -----------
Balance at June 30, 1997
(unaudited)......................... $ $(5,340,000) $ 3,826,000
========= =========== ===========

See accompanying notes to consolidated financial statements.

F-6
67

RENEX CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
--------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ---------- -----------
(UNAUDITED)

Cash Flows from Operating Activities:
Net loss............................................... $ (842,000) $(1,187,000) $(2,449,000) $ (862,000) $ (503,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Provisions for doubtful accounts..................... 93,000 495,000 1,293,000 561,000 493,000
Depreciation and amortization........................ 126,000 509,000 1,642,000 577,000 787,000
Amortization of deferred financing costs............. -- 126,000 226,000 108,000 108,000
Loss on sale of fixed assets......................... -- -- 100,000 -- 27,000
Gain from sale of facility........................... -- -- (364,000) -- --
Changes in operating assets and liabilities:
Increase in accounts receivable.................... (1,438,000) (2,171,000) (2,135,000) (1,276,000) (1,865,000)
(Increase) decrease in inventories................. (63,000) (110,000) (75,000) (69,000) (43,000)
(Increase) decrease in prepaids and other current
assets........................................... (98,000) 78,000 (190,000) (100,000) (248,000)
(Increase) decrease in other assets................ (96,000) (302,000) (245,000) 27,000 (185,000)
Increase in accounts payable and accrued
expenses......................................... 231,000 316,000 1,241,000 500,000 1,191,000
----------- ----------- ----------- ---------- -----------
Net cash used in operating activities............ (2,087,000) (2,246,000) (956,000) (534,000) (238,000)
----------- ----------- ----------- ---------- -----------
Cash Flows from Investing Activities:
Purchases of fixed assets.............................. (1,201,000) (1,505,000) (2,396,000) (545,000) (623,000)
Cash acquired in acquisitions.......................... -- 130,000 -- -- --
Proceeds from the sale of fixed assets................. -- -- 776,000 -- 36,000
----------- ----------- ----------- ---------- -----------
Net cash used in investing activities............ (1,201,000) (1,375,000) (1,620,000) (545,000) (587,000)
----------- ----------- ----------- ---------- -----------
Cash Flows from Financing Activities:
Net change in notes receivable from affiliates......... -- -- 27,000 -- --
Repayment of note payable to bank...................... -- -- (337,000) (18,000) --
Payments on capital lease obligations.................. (3,000) (225,000) (353,000) (226,000) (328,000)
Proceeds from long-term debt........................... -- 5,600,000 1,500,000 1,500,000 --
Proceeds from stock warrants........................... -- 150,000 -- -- --
Proceeds from line of credit........................... -- -- -- -- 1,500,000
Net change in notes payable to affiliates.............. -- -- (94,000) -- --
Repayments of long-term debt........................... -- (800,000) (261,000) (1,000) (30,000)
Payments on line of credit............................. -- -- -- -- (500,000)
Proceeds from sale of stock through exercise of
warrants............................................. 654,000 261,000 -- --
Proceeds from sale of stock............................ 139,000 386,000 2,108,000 -- 12,000
Repurchase of warrants................................. (25,000) (26,000) -- -- --
Payment of deferred financing costs.................... -- (1,510,000) -- -- --
Redemption of preferred stock.......................... -- -- (296,000) -- --
----------- ----------- ----------- ---------- -----------
Net cash provided by financing activities........ 765,000 3,836,000 2,294,000 1,255,000 654,000
----------- ----------- ----------- ---------- -----------
(Decrease) Increase in Cash and Cash Equivalents......... (2,523,000) 215,000 (282,000) 176,000 (171,000)
Cash and cash equivalents, beginning of period........... 3,542,000 1,019,000 1,234,000 1,234,000 952,000
----------- ----------- ----------- ---------- -----------
Cash and cash equivalents, end of period................. $ 1,019,000 $ 1,234,000 $ 952,000 $1,410,000 $ 781,000
=========== =========== =========== ========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest................................. $ 1,000 $ 446,000 $ 971,000 $ 439,000 $ 555,000
=========== =========== =========== ========== ===========
Non-Cash Investing and Financing Activities:
Equipment acquired through capital lease obligations... $ 223,000 $ 970,000 $ 1,267,000 $ 431,000 $ 592,000
Lease equipment liability.............................. -- 422,000 -- --
Conversion of preferred stock.......................... -- -- 48,000 -- --
Stock issued for acquisition........................... -- 1,051,000 790,000 -- --
Issuance of Common Stock............................... -- 20,000 -- -- --
Stock subscriptions receivable for Common Stock
subscribed........................................... 290,000 -- -- -- --
Warrant redemption payable for repurchase of
warrants............................................. 47,000 -- -- -- --

See accompanying notes to consolidated financial statements.

F-7
68

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 AND

(UNAUDITED) SIX MONTHS ENDED JUNE 30, 1996 AND 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION. Renex Corp., a Florida corporation, was incorporated on July
7, 1993. Renex Corp. and its subsidiaries (the "Company") provide kidney
dialysis services to patients suffering from end-stage renal disease. The
Company currently operates, through wholly-owned subsidiaries, twelve dialysis
facilities and two home dialysis programs in seven states. Additionally, the
Company has entered into patient dialysis service agreements with several
hospitals to provide dialysis treatments on an inpatient basis.

The Company has a limited operating history and had an accumulated deficit
of $4,837,000 through December 31, 1996 and is subject to all the risks inherent
in the establishment of a new business enterprise. The Company's ability to
achieve profitability is dependent upon increased utilization of its existing
facilities, controlling operating costs and its ability to develop or acquire
and manage additional dialysis facilities. The Company has availability in its
lines of credit and will continue to rely on external financing to meet its cash
needs.

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its subsidiaries, all of which are wholly-owned.
All intercompany accounts and transactions have been eliminated in
consolidation.

INTERIM FINANCIAL INFORMATION (UNAUDITED). The unaudited interim financial
statements as of June 30, 1997 and for the six months ended June 30, 1996 and
1997 have been prepared on the same basis as the audited financial statements
included herein. In the opinion of management, such unaudited interim financial
statements include all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the results for such periods. The
operating results for the six months ended June 30, 1997 are not necessarily
indicative of the operating results to be expected for the full fiscal year or
for any future period.

USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of the revenues and expenses
during the reporting period. Actual results could differ from those estimates.

NET REVENUES. The Company has agreements with third-party payors that
provide for payments to the Company at amounts different from its established
rates. These third-party payors include Medicare, Medicaid, commercial insurance
carriers, health maintenance organizations and preferred provider organizations.
The basis for payment to the Company under these agreements primarily includes
prospectively determined rates and discounts from established charges. The
Company's net revenues are recorded at the estimated realizable amounts from
third-party payors. The Company provides an allowance for doubtful accounts
based on historical experience of amounts that result to be uncollectible.
Amounts written off are charged against the allowance.

During the years ended December 31, 1994, 1995 and 1996, the Company
received approximately 65%, 59% and 67%, respectively, of its dialysis revenues
from Medicare and Medicaid programs. The remaining balance of dialysis revenues
was from insurance companies and private and other third-party payors.

Revenues associated with the administration of erythropoietin ("EPO") are a
significant source of revenue for the Company. The Company is unable to predict
future changes in the reimbursement rate for EPO treatments, the typical dosage
per administration, or the cost of the medication. In addition,

F-8
69

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EPO is produced by only one manufacturer. The interruption of supplies of EPO to
the Company would have a material adverse effect on the Company's business,
financial condition and results of operations.

CASH EQUIVALENTS. The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash equivalents.

INVENTORIES. Inventories are stated at the lower of cost (first-in,
first-out) or market.

FIXED ASSETS. Fixed assets are carried at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets
ranging from five to ten years for medical and other equipment, and furniture
and fixtures, and twenty years for buildings. Leasehold improvements are
amortized over the lease term or the useful life of the assets, whichever is
lower.

Equipment held under capital lease obligations has been capitalized at the
present value of the minimum lease payments. Depreciation of assets capitalized
under lease obligations is computed under the straight-line method over the
lives of the assets or leases, whichever is appropriate, and is included in
depreciation expense.

INTANGIBLE ASSETS.

NON-COMPETE AGREEMENTS. Non-compete agreements are being amortized
over the terms of the agreements, typically from 2 to 10 years, using the
straight-line method.

PATIENT LISTS. Patient lists are amortized over 5 years, using the
straight-line method.

GOODWILL. Goodwill, the excess of the aggregate purchase price over
the fair value of net assets acquired, is amortized over 20 years using the
straight-line method.

Management evaluates intangible assets for possible impairment whenever
events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. This evaluation is based on certain financial
indicators, such as estimated future undiscounted cash flows.

INCOME TAXES. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense is the tax payable or refundable for the
period plus or minus the change during the period in deferred tax assets and
liabilities.

NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE. Net loss per common and
common equivalent share amounts are based on the average number of common shares
outstanding for each period, after giving effect to the reverse stock split
discussed in Note 18. In accordance with Securities and Exchange Commission
requirements, common stock equivalent shares issued during the twelve month
period prior to the proposed initial public offering have been included in the
calculation as if they were outstanding for all periods, using the treasury
stock method.

FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company's financial instruments
include receivables, payables, debt and credit lines. The fair values of such
financial instruments have been determined based on market interest rates as of
December 31, 1996. The fair values were not materially different than their
carrying values.

STOCK BASED COMPENSATION. Statement of Financial Accounting Standards No.
123, Accounting for Stock Based Compensation ("SFAS 123") encourages, but does
not require, companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to

F-9
70

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

continue to account for stock-based compensation to employees using the
intrinsic value method as prescribed by Accounting Principles Board Opinion
(APB) No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Accordingly, compensation cost for stock options issued to
employees is measured as the excess, if any, of the quoted market price of the
Company's stock at the date of grant over the amount an employee must pay for
the stock. Compensation cost related to stock options of non-employees is
recorded at fair value.

RECLASSIFICATIONS. Certain prior year amounts have been reclassified to
conform to current year presentation.

NEW ACCOUNTING PRONOUNCEMENTS. In March 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 128,
Earnings per Share ("SFAS 128"). This statement establishes standards for
computing and presenting earnings per share ("EPS") and applies to entities with
publicly held common stock or potential common stock. This statement is
effective for financial statements issued for periods ending after December 15,
1997 and earlier application is not permitted. This statement requires
restatement of all prior period EPS data presented. The Company will adopt SFAS
128 in the fourth quarter of the fiscal year ending December 31, 1997. The pro
forma basic (loss) per share and diluted (loss) per share calculated in
accordance with SFAS 128 for the fiscal years ended December 31, 1994, 1995 and
1996, are as follows:

YEARS ENDED
DECEMBER 31,
---------------------
1994 1995 1996
----- ----- -----

Pro forma basic (loss) per share............................ $(.48) $(.61) $(.84)
Pro forma diluted (loss) per share.......................... $(.48) $(.61) $(.84)

During February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 129, Disclosure of Information
about Capital Structure ("SFAS 129"). SFAS 129 requires entities to explain, in
summary form within their financial statements, the pertinent rights and
privileges of the various securities outstanding. Information that shall be
disclosed should include dividend and liquidation preferences, participation
rights, call prices and dates, conversion or exercise prices or rates and
pertinent dates, sinking fund requirements, unusual voting rights, and
significant terms of contracts to issue additional shares. SFAS 129 is effective
for periods ending after December 15, 1997. The adoption of this accounting
standard is not expected to have a material impact on the financial statements.

2. BUSINESS COMBINATIONS

In April 1996, the Company, through two wholly owned subsidiaries, acquired
two limited liability companies, Central Dialysis Center, L.L.C. and
Metropolitan Dialysis Center, L.L.C., each with an interest in two facilities
under development. The acquisitions have been accounted for under the purchase
method.

Central Dialysis Center, L.L.C. was acquired for 166,667 shares valued at
$395,000 and assumed liabilities of $121,000. The Company entered into
non-compete agreements with a group of nephrologists for a period of two and
one-half years and completed the build-out of the facility, which began
operations in October 1996. The purchase price of $516,000 was allocated to the
non-compete agreements.

Metropolitan Dialysis Center, L.L.C. was also acquired for 166,667 shares
valued at $395,000 and assumed liabilities of $42,000. The Company also entered
into non-compete agreements with a similar group of nephrologists. However, this
facility was not completed due to the zoning variance request being denied. The
Company is in the process of finding a suitable location to build the new
facility.

F-10
71

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Based on the Company's inability to generate revenue without a facility and the
uncertainty that a location will be found, the Company has determined the assets
to be impaired and, accordingly, has written off the intangible assets of
$437,000.

In December 1995, Dialysis Facilities, Inc. ("DFI"), which operates three
dialysis facilities and two acute dialysis programs in Mississippi and
Louisiana, was acquired by the Company through a wholly owned subsidiary. The
Company issued 376,857 shares of the Company's common stock with an estimated
value of $1,051,000 to DFI shareholders in exchange for all of the outstanding
common stock of DFI. The transaction was accounted for using the purchase method
of accounting. Accordingly, a portion of the purchase price was allocated to the
net assets acquired based on their estimated fair values. The balance of the
purchase price, $846,000, was recorded as goodwill.

The following table reflects pro forma combined results of operations of
Renex and DFI on the basis that the acquisition had taken place and was recorded
at the beginning of the fiscal years ended December 31, 1994 and 1995.

DECEMBER 31,
------------------------
1994 1995
---------- -----------

Net revenues:
Renex..................................................... $2,746,000 $ 8,794,000
DFI....................................................... 2,116,000 3,111,000
---------- -----------
$4,862,000 $11,905,000
========== ===========
Net income (loss):
Renex..................................................... $ (842,000) $(1,187,000)
DFI....................................................... 33,000 (11,000)
---------- -----------
$ (809,000) $(1,198,000)
========== ===========

3. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the Company's allowance for doubtful accounts are as follows:

DECEMBER 31,
-------------------------------
1994 1995 1996
------- -------- ----------

Beginning balance........................................... $ -- $ 93,000 $ 393,000
Provision for doubtful accounts............................. 93,000 495,000 1,293,000
Write-offs.................................................. -- (195,000) (425,000)
------- -------- ----------
Ending balance.............................................. $93,000 $393,000 $1,261,000
======= ======== ==========

The Company grants credit without collateral to its patients, most of whom
are insured under third party payor agreements, including Medicare and Medicaid,
which represent the significant portion of the balance of receivables. The
remaining receivables are primarily due from third party payors, including
managed care companies, commercial and insurance. The Company also has
receivables due from patients who are self-payors or owe co-payments.

F-11
72

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. FIXED ASSETS

Fixed assets are summarized as follows:

DECEMBER 31,
------------------------
1995 1996
---------- -----------

Land........................................................ $ 24,000 $ --
Building and leasehold improvements......................... 2,234,000 4,008,000
Medical equipment........................................... 859,000 872,000
Equipment, furniture and fixtures........................... 581,000 656,000
Equipment, under capital lease obligations.................. 944,000 2,170,000
---------- -----------
Total.............................................. 4,642,000 7,706,000
Less accumulated depreciation and amortization.............. (868,000) (1,664,000)
---------- -----------
Fixed assets -- net......................................... $3,774,000 $ 6,042,000
========== ===========

5. MEDICAL MALPRACTICE INSURANCE

The Company maintains general liability and professional malpractice
liability insurance on its staff and other insurance appropriate for its
operations. The general liability policy provides coverage of $2,000,000 per
occurrence and $2,000,000 in the aggregate. The professional liability policy
provides coverage for professional (medical) activities of the Company's
employees. This policy provides coverage of $1,000,000 per occurrence and
$3,000,000 in the aggregate.

6. NOTE PAYABLE TO BANK

Consisted of borrowings under a line of credit the Company had with a bank,
with interest at prime plus 1%, and that were collateralized by certain accounts
receivable. The line of credit was paid in full in September 1996.

7. NOTES PAYABLE TO AFFILIATES

Consisted of two unsecured 9% demand notes in 1995. These notes were paid
in full in 1996.

8. LONG-TERM DEBT

Long-term debt consists of the following:

DECEMBER 31,
-----------------------
1995 1996
---------- ----------

Senior subordinated debt (a), net of warrants............... $4,650,000 $6,184,000
Note payable to bank, collateralized by certain fixed assets
and inventory accruing interest at 9.75%, due in monthly
installments, maturing November 1998...................... 170,000 11,000
Various notes payable to banks, collateralized by certain
medical and other equipment, accruing interest at rates
ranging from 7.5% to 10%, due in monthly installments,
with maturities ranging from February 1997 to April
1998...................................................... 103,000 35,000
---------- ----------
$4,923,000 $6,230,000
========== ==========

F-12
73

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The maturity schedule of long-term debt as of December 31, 1996 is as
follows:

YEAR ENDING TOTAL
- ----------- ----------

1997........................................................ $ 26,000
1998........................................................ 20,000
1999........................................................ 1,008,000
2000........................................................ 2,016,000
2001........................................................ 2,142,000
Thereafter.................................................. 1,134,000
----------
$6,346,000
Amount representing warrants................................ (116,000)
----------
Total....................................................... $6,230,000
==========

(a) On June 5, 1995, the Company entered into a senior subordinated secured
loan agreement for $12,500,000 with a lender. This loan bears interest at 13%
and is collateralized by the capital stock of the subsidiaries of the Company.
The Company took an initial advance of $4,800,000 and must make quarterly
interest only payments through June 30, 1999 and principal and interest payments
beginning September 30, 1999 through June 30, 2002, the maturity date. In
connection with this debt, the Company issued 211,023 warrants to the lender.
Management has allocated $150,000 as the value of these warrants to additional
paid in capital and as a reduction of long-term debt. In connection with the
loan agreement, the Company recorded approximately $1,510,000 of deferred
financing costs. Such costs are amortized over the seven year term of the
related debt.

The loan contains certain restrictive covenants, including financial
covenants as to minimum net worth, leverage, and cash flows. The Company was in
default of the minimum net worth and cash flows covenants as of December 31,
1995 and has obtained a waiver of these defaults through April 30, 1996.
Effective May 1, 1996, the loan agreement was revised as to the minimum net
worth and cash flows covenants. The Company was in default of the cash flows
covenant as of December 31, 1996 and has obtained a waiver of this default
through December 31, 1996. Effective January 1, 1997, the loan agreement was
revised as to the minimum net worth and cash flows covenants. As of June 30,
1997, the Company was in compliance with the financial covenants of the revised
loan agreement.

9. LINE OF CREDIT

The Company has available a $4,000,000 revolving line of credit ("Line of
Credit") maturing on August 24, 1998 with interest payable monthly at 2% over
the bank's prime lending rate (10.25% at December 31, 1996). The initial drawing
amount is limited to 80% of the net collectible value of eligible receivables
less than 180 days, aged from the date of service (approximately $2,800,000 at
December 31, 1996). As of December 31, 1996, the Company had not borrowed under
this agreement. The Line of Credit contains financial covenants relating to the
maintenance of a minimum net worth and specified net worth to debt ratios. The
Line of Credit also requires the lender's approval for any acquisitions in
excess of $5,000,000 in the aggregate in any calendar year and for the payment
of cash dividends. As of June 30, 1997, the Company was in compliance with the
financial covenants of the Line of Credit.

F-13
74

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. CAPITAL LEASE OBLIGATIONS

The Company has various capital lease obligations related to purchase of
equipment for its various facilities under a $6,000,000 lease line of credit.
Maturities of capital lease obligations for each of the five years ending
December 31 are as follows:

YEAR ENDING TOTAL
- ----------- ----------

1997........................................................ $ 646,000
1998........................................................ 445,000
1999........................................................ 345,000
2000........................................................ 249,000
2001........................................................ 124,000
----------
1,809,000
Less amount representing interest .......................... (296,000)
----------
Total....................................................... $1,513,000
==========

11. PREFERRED STOCK

SERIES A:

On August 2, 1996, the Company notified all shareholders of the redemption
of all the issued and outstanding shares of the Series A on September 1, 1996
(the "Redemption Date"). Each share of Series A was convertible to common stock
at $1.50 per common share. At the Redemption Date, any non-converted shares of
Series A were redeemed by the Company at a redemption price of $1.00 per share
plus accrued and unpaid cumulative dividends of $.0462 per share.

As a result of the redemption, 988,000 shares of Series A were converted to
658,667 shares of common stock, $.001 par value. The remaining 12,000 shares
were redeemed by the Company, resulting in the payment of $544 in dividends.

SERIES B:

In July 1996, the Company authorized the issuance and sale of 1,050,000
shares of Series B preferred stock, $.10 redeemable convertible series ("Series
B"), $.01 par value at $1.00 per share.

The Series B provided for conversion to common stock on November 15, 1996
if not otherwise redeemed by such date. On November 15, 1996, the Company
notified all shareholders of the redemption of all issued and outstanding shares
of Series B on November 27, 1996. Each share of Series B was convertible to
common stock at the conversion price of $3.00 per share, plus accrued and unpaid
cumulative dividends through the Series B redemption date of $.034 per share.

As a result of the redemption, 775,000 shares of Series B were converted to
268,250 shares of common stock, $.001 par value. The remaining 275,000 shares
were redeemed by the Company, resulting in the payment of $36,000 in dividends.

12. WARRANTS TO PURCHASE COMMON STOCK

During 1993, the Company completed its initial private placement of 120
units, each consisting of 7,500 shares of its common stock and 3,333 Common
Stock Purchase Warrants (the "Warrants") at the offering price of $22,500 per
unit. The proceeds received by the Company amounted to $2,675,000 (net of
expenses of $25,000). Each Warrant entitled the holder thereof to purchase one
share of common stock at an exercise price of $6.00 per share for three years
after issuance.

F-14
75

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On November 1, 1994, the Company's Board of Directors approved the
redemption of all outstanding Warrants at the redemption price of $.30 per
Warrant with a redemption date set at December 9, 1994. The following table
summarizes the activity for the original $6.00 warrants issued in connection
with the private placement:

ADDITIONAL
PAID-IN
WARRANTS CAPITAL
--------- ----------

Original warrants issued 1993............................... 400,000 $ --
Warrants exercised and paid 1994 (net of expenses of
$15,000).................................................. (111,667) 655,000
Warrants redeemed by the Company 1994....................... (240,000) (72,000)
-------- --------
Warrants exercised and receivable at December 31, 1994...... 48,333 583,000
Warrants exercised and paid 1995 (net of expenses of
$9,000)................................................... (45,000) 261,000
Lapsed warrants (pending redemption)........................ (3,333) --
-------- --------
Original warrants outstanding at December 31, 1995.......... -0- --
========
Net proceeds on exercise of original warrants............... $844,000
========

For warrants that were not exercised, the Company authorized the sale of
additional shares of common stock to existing shareholders and others.

In connection with the December 9, 1994 Warrant redemption, the Company
authorized the issuance of new Common Stock Purchase Warrants (the "New
Warrants"). All warrants exercised at December 9, 1994, as well as additional
shares purchased to the extent that Warrants were not exercised, entitled the
shareholder to one New Warrant for each share purchased. Each New Warrant
entitles the holder thereof to purchase one share of common stock at an exercise
price of $9.00 per share for four years after issuance. The New Warrants are
redeemable by the Company after December 9, 1996 at a redemption price of $.30
per New Warrant. A total of 246,201 shares of the Company's common stock have
been reserved for the exercise of the New Warrants. At December 31, 1995 and
1996, none of the New Warrants had been exercised and were outstanding.

In June 1995, the Company issued 211,023 warrants to a lender as an
additional cost of financing. Each warrant entitles the holder to purchase one
share of common stock at an exercise price of $6.00 per share for fifteen years
after issuance. Such warrants are callable by the Company, but in no event
earlier than June 30, 2002 or full payment of the senior subordinated secured
loan (See Note 8). The call price would be the "fair value" of the underlying
common stock at the time of the call. The call price is also protected for a
twelve month period in the event the Company enters into an agreement for sale
or merger for a consideration in excess of the call price. At December 31, 1995
and 1996, none of these warrants had been exercised and were outstanding.

In July 1996, the Company issued 78,751 warrants in connection with the
sale of 1,050,000 shares of Series B preferred stock. Each warrant entitles the
holder to purchase one share of common stock at an exercise price of $6.00 per
share for three years from the date of issuance. At December 31, 1996, none of
these warrants have been exercised and were outstanding.

In November 1996, the Company issued 116,669 warrants to a financial
advisor in connection with a six month advisory agreement. Each warrant entitles
the holder to purchase one share of common stock at an exercise price of $3.00
per share for three years from the date of issuance. Compensation expense of
$26,600 has been recorded to reflect the fair value of the warrants. At December
31, 1996, none of these warrants have been exercised and were outstanding.

F-15
76

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. STOCK OPTIONS

The Company has employee and director stock option plans. The employee plan
permits the grant of options to purchase up to 250,000 shares of common stock.
The director plan permits the grant of options to purchase up to 166,667 shares
of common stock. Subsequent to year end, the number of options permitted to be
granted under the employee plan was increased to 666,667, subject to shareholder
approval.

Under the director plan, each non-employee director receives automatic
non-discretionary grants of options each year (the "Annual Grant"). The Annual
Grant date is the annual anniversary date of shareholders' approval of the
director plan. The initial grant date was April 27, 1994. On each grant date
commencing April 27, 1994, each non-employee director received options to
purchase 834 shares of common stock for service on the board, additional options
to purchase 334 shares of common stock for service on each committee of the
board, other than the executive committee, and additional options to purchase
334 shares for service as chairman of a committee other than the executive
committee. Non-employee directors receive options to purchase 834 shares for
service on the executive committee and an additional 834 as chairman of the
executive committee. The term of the options granted under the director plan is
five years and the options vest 100% immediately but are not exercisable for six
months from date of grant.

All officers and employees are eligible for grants of options under the
employee plan (the "Plan") which includes incentive stock options granted for
employees' current services to the Company and non-statutory stock options
granted for special services which employees provide the Company, as determined
by the Plan. The Plan is administered by a stock option committee which has the
discretion to determine to whom, the amount, exercise prices, exercise terms and
all other matters relating to the grant of options under the employee plan. The
Plan prohibits the grant of incentive stock options under the Plan or any other
plan of the Company to any individual in any calendar year for common stock
having an aggregate fair market value determined at the time the option is
granted in excess of $100,000. All options granted under the employee plan to
date vest 25% six months after the date of grant and 25% on each anniversary of
the date of grant thereafter so long as the individual remains employed by the
Company. All options granted have a five-year term, but are not exercisable for
six months from the date of grant.

Both the director and employee plans provide for the automatic grant of
reload options to an optionee who would pay all, or part of, the option exercise
price by delivery of shares of common stock already owned by such optionee.

The following table summarizes stock options activity:

DECEMBER 31,
----------------------------------------------------------------------------
1994 1995 1996
----------------------- ------------------------ -----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
DIRECTORS PLAN SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- -------------- ------ -------------- ------- -------------- ------ --------------

Outstanding, beginning of
period........................ -- 5,838 $6.00 11,676 $6.00
Granted....................... 5,838 $6.00 5,838 6.00 7,671 6.00
----- ----- ------ ----- ------ -----
Outstanding, end of period...... 5,838 $6.00 11,676 $6.00 19,347 $6.00
----- ----- ------ ----- ------ -----
Options exercisable, end of
period........................ 5,004 11,676 18,513
----- ------ ------

JUNE 30, 1997
-----------------------
WEIGHTED
AVERAGE
DIRECTORS PLAN SHARES EXERCISE PRICE
- -------------- ------ --------------

Outstanding, beginning of
period........................ 19,347 $6.00
Granted....................... 10,669 8.00
------ -----
Outstanding, end of period...... 30,016 $6.71
------ -----
Options exercisable, end of
period........................ 19,347

F-16
77
RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DECEMBER 31,
----------------------------------------------------------------------------- JUNE 30
1994 1995 1996 1997
----------------------- ------------------------ ------------------------ -------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EMPLOYEE PLAN SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES
- ------------- ------ -------------- ------- -------------- ------- -------------- -------

Outstanding, beginning of
period..................... 50,334 $ 6.00 94,501 $6.00 165,344
Granted.................... 50,334 $6.00 54,167 6.00 77,510 6.00 159,704
Cancelled.................. -- -- (10,000) (6.00) (6,667) -- --
------ ----- ------- ------ ------- ----- -------
Outstanding, end of period... 50,334 $6.00 94,501 $ 6.00 165,344 $6.00 325,048
------ ----- ------- ------ ------- ----- -------
Options exercisable at end of
period..................... 3,751 23,716 78,184 97,145
------ ------- -------

JUNE 30,
1997
--------------
WEIGHTED
AVERAGE
EMPLOYEE PLAN EXERCISE PRICE
- ------------- --------------

Outstanding, beginning of
period..................... $6.00
Granted.................... 8.00
Cancelled.................. $ --
-----
Outstanding, end of period... 6.98
-----
Options exercisable at end of
period.....................

DECEMBER 31,
--------------------------------------------------------------------------- JUNE 30,
1994 1995 1996 1997
----------------------- ----------------------- ----------------------- -----------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
OTHER SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
- ----- ------ -------------- ------ -------------- ------ -------------- ------ --------------

Outstanding, beginning of
the period.............. 3,334 $6.00 36,669 $6.00 36,669 $6.00
Granted................. 3,334 $6.00 33,335 6.00 -- 6.00 12,501 8.00
----- ----- ------ ----- ------ ----- ------ -----
Outstanding, end of the
period.................. 3,334 $6.00 36,669 $6.00 36,669 $6.00 49,170 $6.51
----- ----- ------ ----- ------ ----- ------ -----
Options exercisable at end
of period............... 3,334 36,669 36,669 36,669
----- ------ ------ ------

The Company applies APB No. 25 and related interpretations in accounting
for its stock option plans as described in Note 1. Accordingly, no compensation
cost has been recognized in 1995 or 1996 related to these plans. The fair value
of each option granted is determined on the date of grant using a Black-Scholes
option pricing model with the following weighted average assumptions: no
dividend yield, expected volatility of .001, risk-free interest rate of 6.13%
and expected option life of three years. The fair value of the options was
determined to be zero.

14. INCOME TAXES

At December 31, 1996, the Company has tax net operating loss carryforwards
of $6.7 million that expire beginning in 2008 and ending in 2010.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liability at December 31,
1995 and 1996 are presented below:

DECEMBER 31,
------------------------
1995 1996
---------- -----------

Deferred tax assets
Net operating loss carry forwards......................... $1,791,000 $ 2,542,000
Other..................................................... 116,000 72,000
---------- -----------
Total deferred tax assets.......................... 1,907,000 2,614,000
Deferred tax liability
Use of cash method of accounting for income tax
purposes................................................ 977,000 908,000
---------- -----------
Net deferred tax asset (before valuation allowance)......... 930,000 1,706,000
Less valuation allowance.................................... (930,000) (1,706,000)
---------- -----------
Net deferred tax asset...................................... $ -0- $ -0-
========== ===========

F-17
78

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. EMPLOYEE BENEFIT PLANS

As of January 1, 1997, the Company adopted a tax qualified employee savings
and retirement plan (the "401(k) Plan") covering the Company's employees.
Pursuant to the 401(k) Plan, eligible employees may elect to contribute to the
401(k) Plan up to the lesser of 15% of their annual compensation or the
statutorily prescribed annual limit ($9,500 in 1996). The Company matches 25% of
the contributions of employees, up to 4% of each employee's salary. All
employees who were employed at December 31, 1996, and new hires who thereafter
attain at least one year's service, are eligible to participate in the 401(k)
Plan.

The Trustees of the 401(k) Plan, at the direction of each participant,
invest the assets of the 401(k) Plan in designated investment options. The
401(k) Plan is intended to qualify under Section 401 of the Code, so that
contributions to the 401(k) Plan, and income earned on the 401(k) Plan
contributions, are not taxable until withdrawn. Matching contributions by the
Company are deductible when made.

16. RELATED PARTY TRANSACTIONS

The Company is a party to the following transactions with related parties
by virtue of common ownership:

YEAR ENDED DECEMBER 31,
----------------------------
1994 1995 1996
------- ------- --------

Legal fees.................................................. $59,000 $82,000 $133,000
Insurance expense........................................... 30,000 50,000 6,000
Rent expense................................................ 36,000 46,000 59,000

17. COMMITMENTS AND CONTINGENCIES

COMMITMENTS. The Company leases facility space and equipment under
noncancelable operating leases. Minimum annual lease payments under these leases
are as follows:

YEAR ENDING AMOUNT
- ----------- ----------

1997........................................................ $1,160,000
1998........................................................ 959,000
1999........................................................ 768,000
2000........................................................ 563,000
2001........................................................ 479,000
Thereafter.................................................. 1,753,000
----------
Total....................................................... $5,682,000
==========

Rental expense under these operating leases was $362,000, $753,000 and
$1,046,000 (of which $146,000, $245,000 and $257,000, respectively, relate to
equipment leases for patient care and are included in facilities expenses) for
the years ended December 31, 1994, 1995 and 1996, respectively.

A partnership owned by three shareholders is in the process of completing
construction of two facilities and the related leasehold improvements for the
Company. The Company is committed for leasehold improvements for approximately
$400,000. The Company will lease these buildings from the partnership for ten
years at amounts deemed to be fair value.

LITIGATION. The Company is subject to claims and suits in the ordinary
course of business, including those arising from patient treatments, which the
Company believes are covered by insurance. The Company is not involved in any
material litigation and is not aware of any potential claims which would give
rise to material liability.

F-18
79

RENEX CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. SUBSEQUENT EVENTS

The Company's Board of Directors authorized and effected a one-for-three
reverse common stock split to shareholders of record on April 21, 1997.
Shareholders' equity has been changed to give retroactive recognition to the
stock split in prior periods. All references in the consolidated financial
statements to number of shares, per share amounts, stock options and warrant
data of the Company's common stock have been changed to reflect the reverse
stock split.

On April 22, 1997, the Company entered into two year employment agreements
with James P. Shea, the Company's President and Chief Executive Officer, and
Orestes L. Lugo, Vice President -- Finance and Chief Financial Officer. Such
agreements became effective immediately, except that the base salaries will
become effective upon completion of the contemplated public offering. The
employment agreements provide for base salaries of $190,000 and $155,000 for Mr.
Shea and Mr. Lugo, respectively. The base salary for each officer is increased
on January 1, of each year during the term by a minimum of 6%. Each officer
receives an automobile allowance and certain other non-cash benefits, including
life, health and disability insurance. Each employment agreement is
automatically renewed for two years at the end of the initial term and each
extended term, unless either party provides notice of termination at least 90
days prior to the expiration of such term. If any officer is terminated without
cause or there is a change of control during the term of their respective
agreements, such officer will be entitled to severance equal to the greater of
the remaining base salary due under the agreement or one and two year's base
salary, respectively.

During 1997, the Company entered into three operating lease agreements for
three facilities which will be constructed. These lease agreements have terms
ranging from five to twenty years and the minimum annual lease payments under

these agreements range from $181,000 to $319,000.

F-19
80

=========================================================

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON IS AUTHORIZED IN
CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.

---------------------------

TABLE OF CONTENTS

PAGE
----

Prospectus Summary............................ 3
Risk Factors.................................. 6
Use of Proceeds............................... 14
Dividend Policy............................... 14
Capitalization................................ 15
Dilution...................................... 16
Selected Consolidated Financial and Operating
Data........................................ 17
Management's Discussion and Analysis of
Financial Condition and Results
of Operations............................... 19
Business...................................... 26
Management.................................... 42
Principal Shareholders........................ 49
Certain Transactions.......................... 50
Description of Securities..................... 51
Shares Eligible for Future Sale............... 55
Underwriting.................................. 56
Legal Matters................................. 57
Experts....................................... 58
Additional Information........................ 58
Consolidated Financial Statements............. F-1

---------------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

=========================================================

3,000,000 SHARES

[RENEX LOGO]

COMMON STOCK
---------------------------
PROSPECTUS
---------------------------

Vector Securities International, Inc.

Needham & Company, Inc.

, 1997

=========================================================
81

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the
issuance and distribution of the Common Stock being registered. All amounts
shown are estimates, except for the SEC Registration Fee and the NASD Filing
Fee.

SEC registration fee........................................ $ 10,285.01
NASD filing fee............................................. 3,605.00
NASDAQ National Market listing fee.......................... 34,935.62
Legal fees and expenses..................................... 150,000.00*
Printing and engraving expenses............................. 90,000.00
Accounting fees and expenses................................ 150,000.00*
Blue Sky fees and expenses.................................. 2,500.00*
Transfer agent and registrar fees and expenses.............. 10,000.00*
Travel expenses............................................. 25,000.00*
Miscellaneous............................................... 3,674.37
-----------
Total.............................................. $480,000.00*
===========

- ---------------

* Estimated

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Florida Business Corporation Act. Section 607.0850(1) of the Florida
Business Corporation Act (the "FBCA") provides that a Florida corporation, such
as the Company, shall have the power to indemnify any person who was or is a
party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise against liability
incurred in connection with such proceeding, including any appeal thereof, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.

Section 607.0850(2) of the FBCA provides that a Florida corporation shall
have the power to indemnify any person, who was or is a party to any proceeding
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

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Section 607.850 of the FBCA further provides that: (i) to the extent that a
director, officer, employee or agent of a corporation has been successful on the
merits or otherwise in defense of any proceeding referred to in subsection (1)
or subsection (2), or in defense of any claim, issue, or matter therein, he
shall be indemnified against expense actually and reasonably incurred by him in
connection therewith; (ii) indemnification provided pursuant to Section 607.0850
is not exclusive; and (iii) the corporation may purchase and maintain insurance
on behalf of a director or officer of the corporation against any liability
asserted against him or incurred by him in any such capacity or arising out of
his status as such whether or not the corporation would have the power to
indemnify him against such liabilities under Section 607.0850.

Notwithstanding the foregoing, Section 607.0850 of the FBCA provides that
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute: (i) a violation of the
criminal law, unless the director, officer, employee or agent had reasonable
cause to believe his conduct was lawful or had no reasonable cause to believe
his conduct was unlawful; (ii) a transaction from which the director, officer,
employee or agent derived an improper personal benefit; (iii) in the case of a
director, a circumstance under which the liability provisions regarding unlawful
distributions are applicable; or (iv) willful misconduct or a conscious
disregard for the best interests of the corporation in a proceeding by or in the
right of the corporation to procure a judgment in its favor or in a proceeding
by or in the right of a shareholder.

Section 607.0831 of the FBCA provides that a director of a Florida
corporation is not personally liable for monetary damages to the corporation or
any other person for any statement, vote, decision, or failure to act, regarding
corporate management or policy, by a director, unless: (i) the director breached
or failed to perform his duties as a director; and (ii) the director's breach
of, or failure to perform, those duties constitutes: (A) a violation of criminal
law, unless the director had reasonable cause to believe his conduct was lawful
or had no reasonable cause to believe his conduct was unlawful; (B) a
transaction from which the director derived an improper personal benefit, either
directly or indirectly; (C) a circumstance under which the liability provisions
regarding unlawful distributions are applicable; (D) in a proceeding by or in
the right of the corporation to procure a judgment in its favor or by or in the
right of a shareholder, conscious disregard for the best interest of the
corporation, or willful misconduct; or (E) in a proceeding by or in the right of
someone other than the corporation or a shareholder, recklessness or an act or
omission which was committed in bad faith or with malicious purpose or in a
manner exhibiting wanton and willful disregard of human rights, safety, or
property.

ARTICLES AND BYLAWS. The Company's Articles of Incorporation and the
Company's Bylaws provide that the Company shall, to the fullest extent permitted
by law, indemnify all directors of the Company, as well as any officers or
employees of the Company to whom the Company has agreed to grant
indemnification.

UNDERWRITING AGREEMENT. Reference is made to the Underwriting Agreement,
the proposed form of which is to be filed as Exhibit 1.1 hereto, which provides
for indemnification by the Underwriters of directors, officers and controlling
persons of the Registrant against certain liabilities, including liabilities
under the Securities Act, under certain circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

All share totals set forth herein have been adjusted based upon an assumed
one for three reverse stock split to be effected prior to the effective date of
the offering.

In November 1994, the Registrant called for redemption an aggregate of
400,000 warrants which were issued in a private placement completed in 1993 to
the Company's shareholders. The redemption price of each warrant was $.30 per
warrant. Each warrant entitled the holder to purchase one share of Common Stock
for $6.00 per share. In connection with the redemption, an aggregate of 156,667
warrants were exercised by the holders thereof, prior to the redemption date for
aggregate consideration of $940,002. The Registrant issued 156,667 shares of
Common Stock in connection with such

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83

exercises. In addition, the Company sold 89,534 additional shares of Common
Stock underlying warrants that were redeemed by the Company to certain directors
or officers of the Company or individuals who had a prior personal or business
relationship with certain directors of the Company, at an aggregate
consideration of $537,204. In order to encourage exercise, the Company offered
to such warrant holders and other stockholders who purchased additional common
stock a new warrant for each old warrant exercised. Accordingly, 246,201 new
warrants were so issued. Each new warrant entitles the holder thereof to
purchase one share of Common Stock at $9.00 per share until December 9, 1998.
The Registrant sold such securities in reliance on sec. 4(2) of the Securities
Act of 1933 as not involving a public offering of its securities.

In June 1995, in connection with the receipt of a $12,500,000 subordinated
loan, the Registrant issued to such lender, for no additional consideration,
warrants to purchase 211,023 shares of Common Stock. Such warrants are
exercisable at $6.00 per share until June 30, 2010. The Registrant issued such
securities in reliance on sec. 4(2) of the Securities Act of 1933 as not
involving a public offering of its securities.

In December 1995, the Registrant issued an aggregate of 376,857 shares of
Common Stock to three shareholders of Dialysis Facilities, Inc. ("DFI") in
exchange for 100% of the capital stock of DFI pursuant to a merger between DFI
and a wholly-owned subsidiary of the Registrant. The shares of Common Stock had
a fair value of $1,051,000 at the time of issuance. DFI become a wholly-owned
subsidiary of the Registrant as of December 29, 1995. The Registrant issued such
shares in reliance upon sec. 4(2) of the Securities Act of 1933 as not involving
a public offering of its securities. The Company paid a finders fee of 4,000
shares of Common Stock to an individual in connection with the acquisition.

In April 1996, the Registrant issued an aggregate of 166,667 shares of
Common Stock to 11 members of Central Dialysis Center, L.L.C. ("Central") in
exchange for 100% of the membership interests of Central. The Common Stock had a
fair value at the time of issuance of $395,000. In connection therewith, Central
merged with and into a wholly-owned subsidiary of the Registrant. The Registrant
issued such shares in reliance upon sec. 4(2) of the Securities Act of 1933, as
not involving a public offering of its securities.

In April 1996, the Registrant issued an aggregate of 166,667 shares of
Common Stock to 10 members of Metropolitan Dialysis Center, L.L.C.
("Metropolitan") in exchange for 100% of the membership interests of
Metropolitan. Each of the members of Metropolitan were also members of Central.
The Common Stock had a fair value at the time of issuance of $395,000. In
connection therewith, Metropolitan merged with and into a wholly-owned
subsidiary of the Registrant. The Registrant issued such shares in reliance upon
sec. 4(2) of the Securities Act of 1933, as not involving a public offering of
its securities.

In July 1996, the Registrant issued an aggregate of 1,050,000 shares of
Series B Preferred Stock and 78,751 Series B Warrants to 14 accredited
investors, who were either directors or officers of the Registrant or who had
prior personal or business relationships with such directors and/or officers.
The Registrant received gross proceeds of $1,050,000. Each Series B Warrant
entitles the holder thereof to purchase one share of Common Stock at an exercise
price of $6.00 per share until July 31, 1999. The Registrant issued such
securities in reliance upon sec. 4(2) of the Securities Act of 1933, as not
involving a public offering of its securities.

In August 1996, the Registrant commenced a rights offering to its common
shareholders, completed in December 1996, whereby each common shareholder had
the right to purchase one share of common stock for each five shares then held.
The Registrant issued 338,840 shares of Common Stock for aggregate proceeds of
$1,046,000 to approximately 75 shareholders. The Registrant issued such shares
in reliance on sec. 4(2) of the Securities Act of 1933, as not involving a
public offering.

In August 1996, the Registrant approved the redemption of 1,000,000 shares
of Series A Preferred Stock then outstanding. Such shares of Series A Preferred
Stock were issued in July 1993 in connection

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84

with the formation of the Company. The shares of Series A Preferred Stock were
issued to approximately 15 individuals consisting of directors or officers of
the Company or individuals or entities who had a prior personal or business
relationship with such directors or officers. In connection with such
redemption, the holders of the Series A Preferred Stock converted such Series A
Preferred Stock into an aggregate of 658,667 shares of Common Stock and the
Company redeemed 12,000 shares of Series A Preferred Stock for an aggregate
redemption price of $12,000. The Registrant issued such shares in reliance on
sec. 4(2) of the Securities Act of 1933, as not involving a public offering.

In September 1996, the Registrant sold an aggregate of 8,000 shares of
Common Stock to two of its executive officers for the aggregate purchase price
of $12,000. The shares purchased represented the underlying shares of Common
Stock of the Series A Preferred Stock which were actually redeemed by the
Registrant in August 1996. The Registrant issued such shares in reliance on
sec. 4(2) of the Securities Act of 1933, as not involving a public offering.

In November 1996, the Registrant approved the redemption of 1,050,000
shares of Series B Preferred Stock then outstanding and held by 14 accredited
investors. Such shares of Series B Preferred Stock were issued in July 1996. In
connection with such redemption, the holders of the Series B Preferred Stock
converted such Series B Preferred Stock into an aggregate of 268,250 shares of
Common Stock including accrued dividends and the Company redeemed 275,000 shares
for $275,000, plus accrued dividends. The Registrant issued such shares in
reliance on sec. 4(2) of the Securities Act of 1933, as not involving a public
offering.

In November 1996, the Registrant issued warrants to purchase 116,667 shares
of Common Stock at $3.00 per share exercisable through November 15, 1999 to a
financial advisor. The Registrant issued such securities in reliance on
sec. 4(2) of the Securities Act, as not involving a public offering.

In February 1997, the Registrant issued an aggregate of 4,134 shares of
Common Stock for aggregate proceeds of $12,400 to three individuals who had a
prior personal or business relationship with a Company director. Such shares
remained unsubscribed in the Company's rights offering to its shareholders
concluded in November 1996. The Registrant issued such shares in reliance on
sec. 4(2) of the Securities Act of 1933, as not involving a public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS.

Certain of the following exhibits are filed herein and certain other
exhibits, designated with an asterisk (*) were previously filed in the
registration statement.

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

1.1 -- Form of Underwriting Agreement
1.2 -- Form of Representatives' Warrant Agreement
*2. -- Agreement and Plan of Merger by and between Renex Corp.,
Renex Acquisition Corp., Dialysis Facilities, Inc., C. David
Finch, Jr., Charles D. Finch, Sr., and Jeffery C. Finch
dated December 29, 1995
*3.1 -- Articles of Incorporation of the Company
*3.2 -- By-Laws of the Company
4.1 -- Specimen Certificate of Common Stock
*5.1 -- Form of Opinion of Wallace, Bauman, Fodiman & Shannon, P.A.,
Counsel to the Issuer
*10.1 -- Employment Agreement dated April 22, 1997 by and between
Renex Corp. and James P. Shea
*10.2 -- Employment Agreement dated April 22, 1997 by and between
Renex Corp. and Orestes L. Lugo
*10.3 -- Loan and Security Agreement by and between DVI Business
Credit Corporation, Renex Corp. and its Subsidiaries dated
as of August 23, 1996
*10.4 -- Directors Stock Option Plan
*10.5 -- 1994 Employee Stock Option Plan

II-4
85

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

10.6 -- Master Lease Agreement by and between Renex Corp. and
Morcroft Leasing Corp. as of January 1, 1994
*10.7 -- Lease Agreement by and between JCD Partnership and Renex
Dialysis Facilities, Inc. dated December 29, 1995 for
certain property located in Jackson, Mississippi
*10.8 -- Lease Contract and Agreement by and between JCD Partnership
and Renex Dialysis Facilities, Inc. dated December 29, 1995
for certain property located in Jackson, Mississippi
*10.9 -- Lease Contract and Agreement by and between JCD Partnership
and Renex Dialysis Facilities, Inc. dated December 29, 1995
for certain property located in Delta, Louisiana
11.1 -- Computation of per share earnings
*21.1 -- Subsidiaries of the Company
23.1 -- Consent of Deloitte & Touche, LLP.
23.2 -- Consent of Ernst & Young, LLP.
23.3 -- Consent of Lashly & Baer
*23.4 -- Form of Consent of Wallace, Bauman, Fodiman & Shannon, P.A.
(included in their opinion filed as Exhibit 5.1)
*24.1 -- Powers of Attorney
27.1 -- Financial Data Schedule (for SEC use only)

- ---------------

ITEM 17. UNDERTAKINGS

(a) EQUITY OFFERINGS OF NON-REPORTING REGISTRANTS: The undersigned
registrant hereby undertakes to provide to the representatives of the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
such representatives of the underwriters to permit prompt delivery to each
purchaser.

(b) REQUEST FOR ACCELERATION OF EFFECTIVE DATE. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of Prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of Prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
Prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

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86

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coral Gables, State of
Florida, on the 8th day of September, 1997.

RENEX CORP.

By: /s/ JAMES P. SHEA
------------------------------------
James P. Shea
President/Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and Power of Attorney have been signed by the following
persons in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

/s/ MILTON J. WALLACE* Chairman of the Board September 8, 1997
- ----------------------------------------------------- of Directors
Milton J. Wallace

/s/ ARTHUR G. SHAPIRO, M.D.* Vice Chairman of the September 8, 1997
- ----------------------------------------------------- Board, Director of
Arthur G. Shapiro, M.D. Medical Affairs

/s/ JAMES P. SHEA President/CEO, Director September 8, 1997
- -----------------------------------------------------
James P. Shea

/s/ MARK D. WALLACE* Director September 8, 1997
- -----------------------------------------------------
Mark D. Wallace

/s/ EUGENE P. CONESE, SR.* Director September 8, 1997
- -----------------------------------------------------
Eugene P. Conese, Sr.

/s/ C. DAVID FINCH, M.D.* Director September 8, 1997
- -----------------------------------------------------
C. David Finch, M.D.

/s/ JOHN E. HUNT, SR.* Director September 8, 1997
- -----------------------------------------------------
John E. Hunt, Sr.

/s/ JEFFREY H. WATSON* Director September 8, 1997
- -----------------------------------------------------
Jeffrey H. Watson

/s/ CHARLES J. SIMONS* Director September 8, 1997
- -----------------------------------------------------
Charles J. Simons

/s/ ORESTES L. LUGO Vice President/Chief September 8, 1997
- ----------------------------------------------------- Financial and
Orestes L. Lugo Principal Accounting
Officer

*By: /s/ JAMES P. SHEA
- ----------------------------------------------------
James P. Shea
Attorney-in-Fact

II-6